Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH TRANSPORT DOCKS BILL

LONDON TRANSPORT BILL

THAMES CONSERVANCY BILL

Lords Amendments considered and agreed to.

Oral Answers to Questions — HOME DEPARTMENT

Coroners' Inquests

Sir. G. de Freitas: asked the Secretary of State for the Home Department whether he will introduce legislation to give him power to prevent coroners delaying the holding of inquests and thereby causing distress to relatives of the deceased.

The Minister of State, Home Office (Miss Alice Bacon): Any legislation on this subject must await the report of the Committee under the chairmanship of Mr. Norman Broderick, Q.C., which is reviewing the whole of the law relating to coroners and coroners' courts.

Sir. G. de Freitas: Will my right hon. Friend bring to the attention of the Committee the circumstances known to the Home Office, in which great distress was caused to one of my constituents because of the coroner's very long delay in holding an inquest?

Miss Bacon: Yes, we will certainly do that, but I remind my hon. Friend that, although we undertook to look into the matter which he has mentioned, my right hon. Friend has no responsibilities whatever in respect of coroners or coroners' courts, because the coroner is an independent

judicial officer. But we will certainly bring anything to the attention of the Committee.

Dr. Winstanley: Is the right hon. Lady aware that there is a growing body of informed opinion which believes that the whole office and machinery of coroners' inquests require overhaul and that many believe that we should be wise to follow the excellent example of the Scottish procedure?

Miss Bacon: It is precisely those matters which are being considered by the Committee.

League of Safe Drivers (Examiners)

Mr. Derek Page: asked the Secretary of State for the Home Department if he will call for reports from chief constables on the extent to which they allow officers under their control to act as spare-time examiners for the League of Safe Drivers.

The Under-Secretary of State for the Home Department (Mr. Dick Taverne): The extent to which serving police officers can be permitted or encouraged to undertake spare-time activities of this kind is a matter for chief officers of police to decide in the light of local circumstances; and my right, hon. Friend sees no need for any action on his part.

Mr. Page: Does not my hon. Friend agree that the League discharges an important and honourable duty and should be encouraged in every way possible?

Mr. Taverne: I agree, and I think that the Ministry of Transport looks with favour on the work of the League, but how far the police can assist must depend on the local circumstances.

Police Authority Meetings (Admission of the Press)

Mr. Derek Page: asked the Secretary of State for the Home Department what provision he is making to ensure adequate access by the Press to proceedings of administrative bodies set up as a result of reorganisation and amalgamation of police forces.

The Secretary of State for the Home Department (Mr. Roy Jenkins): The position of a combined police authority does not differ in this respect from that of any other police authority.

Mr. Page: I am most grateful for that reply. Does my right hon. Friend appreciate that it will be very welcome to the Press, which discharges the very important function of watching the public interest?

Aliens (Trials)

Mr. Eadie: asked the Secretary of State for the Home Department if he is satisfied that aliens and naturalised British subjects in this country who are brought before the courts for alleged offences are sufficiently protected, because of language difficulty, to ensure they under stand the proceedings and get a fair trial; and if he will take steps, by legislation or otherwise, to provide for adequate assistance in the courts for such persons.

The Under-Secretary of State for the Home Department (Mr. Maurice Foley): I am satisfied that in principle the law and practice already afford adequate protection, but my right hon. Friend is considering the steps needed to remedy some minor defects.

Mr. Eadie: I welcome that reply. I hope that it will receive the widest publicity and alleviate a hardship in my constituency.

Sir Knox Cunningham: What are the present arrangements for interpretation in criminal courts?

Mr. Foley: In criminal courts there is adequate free assistance for interpretation available for the defence, and, of course, the prosecution would provide its own interpreters.

Anti-litter Regulations

Mrs. Joyce Butler: asked the Secretary of State for the Home Department how many prosecutions were made under anti-litter regulations during the last 12 months.

Mr. Taverne: During 1965, the last complete year for which statistics are available, there were 2,914 prosecutions in England and Wales under the Litter Act, 1958.

Mrs. Butler: As these prosecutions do not seem to have materially improved the slovenly state of the towns and countryside, would my hon. Friend consider what other steps could be taken to deal with

this shocking condition and perhaps other methods for encouraging public responsibility? May I remind him that in this House, for example, a sackful of litter is taken from this Chamber every morning? Perhaps we could begin by setting an example here.

Mr. Taverne: I am not responsible for dealing with litter in the House, but I will certainly bear in mind my hon. Friend's remarks. The provisions of the Litter Act are matters for the Minister of Housing and Local Government and not the Home Office.

Children in Care

Mrs. Joyce Butler: asked the Secretary of State for the Home Department what proportion of the number of children in care are from normal families who have been evicted from their homes; and what discussions he has had with local authorities and other bodies about the possibility of avoiding eviction in such cases.

Mr. Roy Jenkins: The information is not available in the form requested, but over a recent period of 12 months, just over 3 per cent. of the children received into care by local authorities in England and Wales came from evicted families. I propose to consider with the other Ministers concerned, in consultation with the local authority associations, what further guidance should be issued to local authorities on problems of homelessness.

Mrs. Butler: May I thank the Home Secretary for that reply. In view of the fact that this separation from parents, in addition to them losing their home, can have a very serious, long-term effect on children, would not the Home Secretary agree that we should end this as soon as possible and deal with the difficulties of local authorities in this respect?

Mr. Jenkins: I feel some concern about this and that is precisely why I am looking at the matter in consultation with my right hon. Friend.

Complaints Against Police Officers

Mr. Whitaker: asked the Secretary of State for the Home Department whether he will now take steps to establish machinery for serious allegations by members of the public against the police to be independently investigated.

Mr. Roy Jenkins: I do not at present contemplate any change in the statutory arrangements for dealing with complaints against police officers; but I shall continue to keep them under close review.

Mr. Whitaker: As New York has shown that this is perfectly practicable, will my right hon. Friend introduce this inevitable reform sooner rather than later, in view of the beneficial effect that it will have upon police public relations which, I think my right hon. Friend will agree, are the foundation of police effectiveness?

Mr. Jenkins: The new scheme in New York is just beginning and I should like to see how it works out. The provisions of Section 49 of the Police Act, 1964, have been operating for only a bare two years and I should like to see how they work out for a little longer.

Mr. Hector Hughes: If the Minister does set up any such inquiry, will he appoint as its head some thoroughly expert Sherlock Holmes who will have regard to the fact that many bogus charges are made against the police by organised perjurers?

Mr. Jenkins: I do not know about getting a Sherlock Holmes, but it is certainly the case that 90 per cent. of the complaints against the police prove to be unfounded. Although there is a substantial number of complaints against the police each year, this number is considerably exceeded by the number of letters of appreciation received by the police from the public.

Sir G. Nabarro: Would the Home Secretary repudiate at once the allegation made by his hon. Friend the Member for Hampstead (Mr. Whitaker) that reform in this field, to quote his hon. Friend, is inevitable? Would he also bear in mind that police public relations will be undermined still further if the strength and power of perjurers is reinforced?

Mr. Jenkins: I pay the greatest possible regard to police public relations and I am extremely anxious to foster them. I think that the hon. Member for Kidderminster had better conduct his private debates with the hon. Member for Hampstead.

Sir G. Nabarro: On a point of order. Is it not the fact that my hon. Friend

the Member for Kidderminster (Sir T. Brinton) is not present in the Chamber?

Mr. Jenkins: I overestimated the hon. Member's degree of continuity.

Fireworks

Mr. Archer: asked the Secretary of State for the Home Department on how many occasions he has ordered fireworks to be rendered harmless under Section 1 of the Fireworks Act, 1951, during the latest period for which figures are available.

Miss Bacon: None, Sir. My Department seeks to ensure safety in the design and manufacture of fireworks by frequent inspections of firework factories and by close consultation with the trade.

Mr. Archer: Since during the fireworks period each year 2,000 to 3,000 accidents occur involving fireworks, is my right hon. Friend satisfied that the system of inspection is adequate?

Miss Bacon: Yes, I am satisfied that the system is adequate, and I very much regret the fact that there are so many accidents. These accidents usually arise from carelessness and misuse of fireworks which are not handled according to the instructions.

Jury System

Mr. Archer: asked the Secretary of State for the Home Department whether he will appoint a committee to inquire into the workings of the jury system in civil and criminal cases, respectively, with a view to the introduction of appropriate legislation.

Mr. Roy Jenkins: Recommendations about eligibility for jury service and related matters have already been made by the Departmental Committee on Jury Service. I am considering whether any action is necessary on other aspects of the jury system.

Mr. Archer: As the Departmental Committee expressly pointed out that it was not inquiring into the merits of the jury system or its efficiency as a matter of ensuring justice, would my right hon. Friend agree that its mere antiquity should not protect it from an inquiry into these aspects?

Mr. Jenkins: Its mere antiquity should certainly not protect it from an inquiry nor should we always shelter behind an inquiry in all circumstances. I am considering whether we can or should take action, while preserving the jury system, to make it more efficient.

Mr. Hogg: Will the right hon. Gentleman bear in mind that the almost religious veneration with which a jury has been regarded hitherto is beginning to disappear, even in the minds of the judiciary?

Mr. Jenkins: I should have thought that the judiciary was perhaps leading in bringing about this disappearance. I am certainly paying close attention to what they, and to what lay members of the public, have to say.

Mr. Sydney Silverman: Would my right hon. Friend bear in mind when he is pursuing these investigations into whether legislation is necessary to amend our jury system in a way that there are a great many people, in the House and outside of it, who do not share the rather odd view of the Lord Chief Justice that normally a jury is wrong when it acquits and right when it convicts?

Mr. Jenkins: I will endeavour to bear all considerations in mind when studying this matter.

Child-Care Officers

Mr. Winnick: asked the Secretary of State for the Home Department what action he is taking to increase the number of trained child-care officers and to increase the salaries of these officers.

Miss Bacon: My right hon. Friend has approved the Central Training Council's proposals to expand the annual output of qualified students from about 275 in 1966 to 650 in 1969. Further proposals are under consideration. Salaries are a matter for the established negotiating machinery for local authority staffs and not for my right hon. Friend.

Mr. Winnick: Does my right hon. Friend really believe that enough is being done, even along the lines suggested, in recruiting these officers? Is my right hon. Friend aware that most

local authority child-care departments have tremendous difficulty in recruiting enough people and that most are desperately short of child-care officers?

Miss Bacon: Yes, I am not minimising the shortage, but I want to emphasise that we are providing the training facilities to increase the number of child-care officers considerably over the next few years. We are determined to do everything that we can, because we know that there is such extreme anxiety.

Mr. Sharples: Can the right hon. Lady say whether the Government's wage freeze will apply to child-care and probation officers?

Miss Bacon: That is another question which I could not answer now.

Royal Commission for the Exhibition in 1851

Mr. William Hamilton: asked the Secretary of State for the Home Department what are the functions of the Royal Commission for the Exhibition in 1851; and what are the sources and annual amount of its income.

Mr. Roy Jenkins: Its function is to further the general objects for which the Exhibition of 1851 was designed, in particular to increase the means of industrial education and to extend the influence of science and art on productive industry. Its income derives from investment of the profits of the Exhibition and amounts to some £71,500 a year.

Mr. Hamilton: Does my right hon. Friend agree with the proposition that it is perhaps about time that he wound up this Royal Commission and transferred its functions to the Department of Education and Science, a Department which is publicly accountable to this House? Can he say whether there is any overlap between the functions of this Commission and the Department of Education and Science?

Mr. Jenkins: It is perfectly true that this body has been in existence for a rather longer time than most Royal Commissions, but it is not entirely in the nature of a Royal Commission in the normal sense of the word. The Commission performs some useful functions. It endows science research scholarships


for Commonwealth students and senior students in the United Kingdom and awards Rome scholarships in the fine arts. It presents reports to the House every 10 years, which, in view of its antiquity, is not perhaps an unreasonable period. I will certainly look, in conjunction with my right hon. Friend the Secretary of State for Education and Science, to see whether there is any overlapping.

Gang Warfare

Mr. Hamling: asked the Secretary of State for the Home Department what representations have been made to him on the growth of gang warfare in England and Wales; what replies he has sent; and whether he will make a statement.

Mr. Roy Jenkins: I have had no representations exactly in the terms of my hon. Friend's Question, but I am in close contact with the Commissioner of Police about this and other major aspects of the crime situation.

Mr. Hamling: Is my right hon. Friend aware that there is a widespread belief that gang warfare is on the increase because of the rise in the number of gaming clubs in London?

Mr. Jenkins: My hon. Friend has another Question down about gaming clubs to which we shall come in a moment. So far as the wider considerations are concerned, these matters can be debated on Monday.

Sir C. Osborne: In view of the great increase in the viciousness of crimes, and the sufferings of innocent persons involved, why will not the Home Secretary flog these people? If he will not do so, what other sort of punishment does he think is adequate?

Mr. Jenkins: When confronted with a problem I do not believe in hitting out blindly.

Sir C. Osborne: That is a stupid answer.

Gaming Clubs

Mr. Hamling: asked the Secretary of State for the Home Department if he will seek powers to exercise stricter control over gaming clubs.

Mr. Roy Jenkins: I shall shortly be circulating provisional proposals for amending legislation to the various bodies concerned and inviting their comments.

Mr. Hamling: Would my right hon. Friend also consider the vast amount of money which changes hands in these clubs and try to find out from where it comes?

Mr. Jenkins: I shall be considering all these aspects of the matter with a view to introducing amending legislation, which I believe is necessary.

Mr. Hogg: Will the right hon. Gentleman bear in mind that this is a matter which interests a great number of hon. Members on both sides of the House? Will he give hon. Members an opportunity to know at least in general the nature of the proposals he is about to circulate?

Mr. Jenkins: I will look at that, because I am anxious that there should be as wide a climate of informed opinion on this matter as possible.

Mr. Bagier: Would my right hon. Friend bear in mind that there is a strong fear that some of the worst elements of American protection racketeers have been attracted to this country because of the tremendous pickings? We look forward to and hope that the amending legislation will bear this in mind.

Mr. Jenkins: I shall bear all aspects, including this one, in mind.

Employment (Racial Discrimination)

Mr. St. John-Stevas: asked the Secretary of State for the Home Department if he will now introduce legislation to end discrimination in employment on racial grounds by management and trade unions in British industry.

Mr. Foley: If further experience shows that the existing machinery for dealing with discrimination in employment is inadequate, my right hon. Friend will be prepared to consider introducing any necessary legislation.

Mr. St. John-Stevas: I am grateful for that reply. In view of the increasing number of children of immigrants who are growing up in this country and are


not content to be confined to menial jobs, and in order to avoid the sort of racial tension that there is in America, is it not essential that they be given equality of opportunity in competing for skilled jobs?

Mr. Foley: Yes, Sir.

Adoption of Children

Mr. St. John-Stevas: asked the Secretary of State for the Home Department when Her Majesty's Government intends to introduce legislation to remedy the anomalies in the law governing the adoption of children.

Miss Bacon: My right hon. Friend has no immediate plans for legislation, but he will be glad to consider any specific proposals the hon. Member has in mind.

Mr. St. John-Stevas: Will he, or she, consider this proposal, namely, that the period of possession of the child which must elapse before the adopting parents can make an application for an order be reduced, since this is a period of great anguish and anxiety for them?

Miss Bacon: I realise that it is a period of very great anguish, although there are two points of view on this matter. We all know of cases in which the mother agrees to her child being adopted while she is in an emotional state after the birth of the child and wishes to retain it afterwards. We are considering this matter and will look at proposals made to us.

Mr. Abse: As there is so much concern about this aspect of the matter, about third-party adoptions and general procedure, is it not time that consideration was given to the appointment of an informed committee to investigate what is a very difficult problem and one upon which there are so many views?

Miss Bacon: This is an interesting suggestion which we will consider. As my hon. Friend knows, the National Bureau for Co-operation in Child Care is at this moment conducting a national study of adoption sponsored by the Home Office. A great deal needs to be learnt about this very difficult problem. But we will listen to views which anyone has.

Mr. Hogg: Will the right hon. Lady bear in mind that there are not two but three points of view about this matter? The third is the interest of the child which is all too often forgotten in the war between two prospective homes.

Miss Bacon: I agree with the right hon. and learned Gentleman that the welfare of the child should be the primary consideration.

Severn Bridge

Mr. Abse: asked the Secretary of State for the Home Department if he will call for reports from the chief constables concerned regarding the action they have taken to inquire into the threats to sabotage the construction of the Severn Bridge; whether he is satisfied with the security arrangements being made on the opening of the bridge by Her Majesty the Queen; and if he will make a statement.

Mr. Taverne: My right hon. Friend has received reports from the Chief Constables of Gloucestershire and Monmouthshire, and is satisfied that appropriate arrangements have been made.

Mr. Abse: In view of the fact that today we have learnt of a most unfortunate threat to the life of the Secretary of State for Wales, and in view of the past incidents by self-styled Welsh Nationalists and the tardy repudiation by their leaders of this type of conduct, may I ask my hon. Friend to take particular care, in view of the concern in Monmouth, that special security arrangements are made?

Mr. Taverne: I think that we should, in all fairness, distinguish between Welsh Nationalists and those who have been making threats against a certain bridge and other properties. I assure my hon. Friend that the necessary measures have been taken and that we will guard the Severn Bridge and the Secretary of State for Wales, and other valuable property, with the greatest care.

London Borough Councils (Elections)

Mr. Boyd-Carpenter: asked the Secretary of State for the Home Department why he proposes to extend the term of election of members of the councils of London boroughs elected in 1964.

Mr. Roy Jenkins: Because of the low polls which would be likely to result from two local government elections being held in successive months in 1967; and because of the administrative difficulties and the risk of confusion to the electors likely to result from elections for both tier authorities being held on the same day in later years.

Mr. Boyd-Carpenter: Is it not a very dubious principle to extend the mandate of people who have been elected for a fixed term? Is not the real reason for this the desire of the Labour Party to retain control of boroughs which it will lose at the next election for a year during which they can impose comprehensive education?

Mr. Jenkins: No, not at all. I received representations in favour of the change from 27 out of 32 London borough councils, by no means all of which were Labour-controlled.

Mr. Freeson: Would my right hon. Friend remind and educate right hon. and hon. Members opposite that, by the London Government Act, they created new powers extending the authority of the elected members of local councils?

Mr. Hogg: Is it a fact that out of the 27 boroughs to which the Secretary of State referred 20 were Labour-controlled? Is it only a merciful dispensation of providence that their political interest happened to coincide with what they regarded as their public duty, or is it just another case of Socialist fiddle and fix?

Mr. Jenkins: In considering the representations from London boroughs, I have to take into account the fact that the electorate of London boroughs have, in their wisdom, given very large majorities to Labour representatives. But, as the right hon. and learned Gentleman made clear, seven Conservative boroughs requested this change with equal enthusiasm.

River Thames (Flood Warning)

Mr. A. Royle: asked the Secretary of State for the Home Department what action he has taken to ensure that residents in Kew and Richmond are given adequate warning of possible flood hazard from the River Thames.

Mr. Taverne: As the hon. Member was informed in answer to his Question of 10th March, the arrangements were reviewed earlier this year, and in future there should be an improvement of 30 minutes in the speed with which warnings are broadcast at Kew and Richmond. This should ensure that warnings are always given in good time.

Mr. Royle: Is the hon. Gentleman aware that this 30-minute extension is totally inadequate? In view of the grave concern caused locally, would he consider this matter again since, with the prospect of winter coming on and floods taking place, 30 minutes plus the original time will not be adequate to enable householders to take the necessary precautions?

Mr. Taverne: The only way in which better notice could be given would be if, every time there was a chance of high tide, warning was given, which would mean in a number of cases that false alarms would be given. I am advised that warning to the public two and a quarter hours before predicted high water, which is what will be the case, should be adequate, and that there will be no serious risk of damage to life or property.

Mr. Grimond: I declare an interest in this matter as my house is subject to flooding. Is the hon. Gentleman aware that I wholly support the point put to him by the hon. Member for Richmond, Surrey (Mr. A. Royle), but that the solution is to stop the Thames from overflowing its banks? Would he, therefore, kindly do what he can to encourage the authorities concerned to raise the embankment by 3 ft.? In days when we can explore space and build enormous new premises for local authorities, surely we can stop the river getting into people's houses.

Mr. Taverne: I realise that, since King Canute was not notably successful, building higher banks would be the answer, but that is not part of the responsibility of the Home Office.

Mr. Gresham Cooke: Will the hon. Gentleman also look at the question of the tidal warning? Is he aware that a policeman with a handbell is heard by only a very few people, and such a warning ought to be by siren or maroon?

Mr. Taverne: I will certainly look into the nature of the warning which is given.

Immigration from the Commonwealth

Sir D. Renton: asked the Secretary of State for the Home Department when he proposes to introduce legislation to implement the proposals contained in the White Paper, Command Paper No. 2739, of a year ago.

Mr. Goodhart: asked the Secretary of State for the Home Department what proposals he has for introducing the new legislation recommended in the Government's White Paper on Immigration published last year.

Mr. Roy Jenkins: As my right hon. Friend the Prime Minister has explained, an independent committee is first reviewing the question of providing rights of appeal.

Sir D. Renton: Do the Government still stand by their proposals on immigration contained in their White Paper of a year ago? If they do, why should they take so long to implement those proposals?

Mr. Jenkins: Yes, Sir. We wish to have the considered Report of the Wilson Committee on the rights of appeal against refusal of entry for both Commonwealth citizens and alien citizens.

Mr. Goodhart: When does the right hon. Gentleman expect to receive the Report of this Committee, which has been set up to investigate the proposals put forward by his own Department after a very careful review?

Mr. Jenkins: I do not think it right to press this Committee to produce a Report earlier than it thinks it right to do so. I hope to receive it in the early months of next year.

Drugs (Prevention of Misuse) Act, 1964

Mr. Gresham Cooke: asked the Secretary of State for the Home Department how many persons were convicted in England and Wales of offences under the Drugs (Prevention of Misuse) Act, 1964, from the commencement of the Act to 31st December, 1964, and in each quarter since then until the end of the first

quarter of 1966; and whether such convictions generally show an increase.

Miss Bacon: The figures for these periods are 79, 206, 188, 222, 254 and 242 respectively.

Mr. Gresham Cooke: Does this not indicate that the drug menace is serious and is rising, particularly in the Metropolitan area? Would the Minister of State say what action the police are taking about the theft of a quarter of a million purple hearts from the warehouse of British Drug Houses in North Kensington on 22nd July, and whether there is any sign of their catching up with all these drugs floating round London?

Miss Bacon: During the course of the Adjournment debate yesterday, I drew attention to the need for greater security in those places where drugs are kept. We have recently written to all warehouses and firms which keep drugs, asking them what their security arrangements are, with a view to strengthening them. I regret as much as the hon. Gentleman the theft of these 200,000 purple hearts. The police are doing what they can to find the culprits and recover them. We know that a great many of these drugs are getting into the illicit market through thefts of this kind.

Animals (Export for Research)

Mr. Fisher: asked the Secretary of State for the Home Department which interested bodies he has consulted so far about the introduction of safeguards to protect animals bred in Great Britain and exported abroad for research purposes, and with what result.

Miss Bacon: My right hon. Friend has not yet consulted any outside bodies, but he will in the near future be inviting the views of animal welfare organisations.

Mr. Fisher: Would the hon. Lady bear in mind the really appalling cruelties inflicted on animals which we export to some foreign countries, and will she try very hard to make suitable arrangements with those countries before allowing further exports of animals for research purposes?

Miss Bacon: I am not quite sure whether the hon. Gentleman is referring to cruelty in transit or to what happens


to these animals when they get to the countries where they are going to be used. We have this matter very much in mind and we are having consultations. As I said, we are having an early meeting with the animal welfare organisations.

Judges' Rules

Dr. Summerskill: asked the Secretary of State for the Home Department if he will initiate discussions with Her Majesty's Judges on the subject of cautions to be administered by police officers to persons suspected of having committed criminal offences with a view to amending or abolishing the present Judges' Rules.

Mr. Taverne: Since the Criminal Law Revision Committee is carrying out a review of the law of evidence in criminal cases, consideration of any possible changes in the procedure followed by the police in obtaining evidence should await its report.

Dr. Summerskill: Will my hon. and learned Friend bear in mind that the operation of the present Judges' Rules encourages crime by tying the hands of police officers, by protecting the guilty, and by discouraging innocent people from giving information to the police investigating a crime?

Mr. Taverne: It may well be the case that at the moment the law of evidence is too heavily weighted in favour of the criminal, but I think that that is a matter which must be very carefully considered. Obviously it will be considered by the Criminal Law Revision Committee, and I think that we should wait until the Committee reports.

Mr. Hogg: Can the hon. and learned Gentleman tell us when we can expect that Report? Is it within the terms of reference of the Committee to raise the whole question of the right of silence of the accused?

Mr. Taverne: I am not sure when the Committee will be reporting, although it is unlikely that it will be reporting this year. Certainly, it is looking at the admissibility of evidence of confessions, and, although I am not absolutely sure, I think that it is also looking at whether or not the accused must make statements.

Mr. J. T. Price: Is my hon. and learned Friend aware of the very unsatisfactory

reactions amongst the police forces of this country following the issue of a Home Office pamphlet headed, "How to make a Complaint against the Police", which many of them resent deeply and whose resentment I share, having read the pamphlet. Will he arrange to withdraw it?

Mr. Taverne: My hon. Friend's question is going beyond that which is on the Order Paper. The question of complaints has been dealt with and will be dealt with in answer to other Questions.

Mr. Carlisle: Will the hon. and learned Gentleman agree that the Judges' Rules, to which the Question refers, are a matter for the judges? Would he not consider inviting the Committee of Judges, which, I understand, advises on these matters, to consider reviewing the Rules, in view of the difficulty that the police are having in implementing them?

Mr. Taverne: The Criminal Law Revision Committee is looking at the question of the admissibility of confessions. The Judges' Rules are intimately tied up with that question, and this is eminently a matter for that Committee.

Mr. Sydney Silverman: Will my hon. and learned Friend bear in mind that it is, always has been, and, I hope, always will be a fundamental principle of our law that a man should not be compelled to incriminate himself in any circumstances? If this were only a matter for the judges, the present Rules were made by the judges, and he knows the extent of the dissatisfaction with them on both sides of the House.

Mr. Taverne: We will bear all those considerations in mind when we come to consider the Report of the Committee.

Pinewood Hospital Buildings, Wokingham

Mr. van Straubenzee: asked the Secretary of State for the Home Department when he expects to come to a decision as to whether his Department have a use for the Pinewood Hospital buildings near Wokingham.

Miss Bacon: My right, hon. Friend has decided to seek the views of the local planning authority on a proposal to use the site for a detention centre.

Mr. van Strubenzee: Does the right hon. Lady realise what what dismay that


Answer will be received in my constituency, bearing in mind the close proximity of Broadmoor to these buildings? Will she at least ensure that a decision is taken as soon as possible, the buildings having been empty since January?

Miss Bacon: We should be quite willing to make a decision as soon as possible, but, as often happens in these cases, it is the objections of the local inhabitants which cause the delays. Every day of the week we get requests from hon. Members on both sides of the House to provide more detention centres, and that is what we want to do.

Police Forces (Coloured Officers)

Mr. Whitaker: asked the Secretary of State for the Home Department what proportion of regular police officers in England and Wales are coloured; and how this figure compares with coloured people's proportion of the total population there.

Mr. Taverne: There are about 85,000 regular police officers in England and Wales. One coloured officer was attested at Coventry earlier this year and is now serving, and a second will be attested at Birmingham next month. As there are no official population statistics based on colour I cannot answer the second part of this Question.

Mr. Whitaker: In view of the fact that between 1 and 2 per cent. of the population of the country are coloured, is not the proportion in the police force rather conspicuous in a body of men which is now responsible for enforcing legislation against racial discrimination?

Mr. Taverne: I do not think that the proportion is necessarily significant, because many of the coloured population are recent arrivals in the country who may not wish to apply. I agree that it is desirable that there should be more coloured applicants to the police coming forward. I am glad to see that more suitable coloured applicants are now coming forward, and, as I said in reply to a Question on 26th May, my right hon. Friend is now taking steps with youth employment officers to encourage more coloured applicants to come forward.

Sir C. Osborne: Does the hon. and learned Gentleman accept the statement

made by his hon. Friend the Member for Hampstead (Mr. Whitaker) that the coloured population is now between 1 and 2 per cent.? Secondly, why did his right hon. Friend open the flood gates to still further increases——

Mr. Speaker: Order. That does not arise on this Question.

Sir C. Osborne: It affects whether the number of police——

Mr. Speaker: Order. The hon. Gentleman must accept my Ruling. It does not arise on this Question.

Dartmoor Prison (Canteen Accounts)

Mr. Driberg: asked the Secretary of State for the Home Department if he will make a statement on the case, particulars of which have been sent to him, in which canteen accounts in Dartmoor Prison were fraudulently manipulated by a member or members of the staff; what action has been taken; and what position is now held by the prison officer principally concerned.

Mr. Roy Jenkins: In February, 1965, an inquiry into irregularities in the inmates' canteen account at Dartmoor Prison revealed a deficit of approximately £135. There was no evidence of fraudulent manipulation by any member of the staff, but the inquiry showed that the staff concerned had not fully complied with departmental accounting procedures and they were suitably warned. The two prison officers involved continue to be employed on duties appropriate to their seniority and experience.

Mr. Driberg: Could my right hon. Friend say what those duties are and where they are being conducted? Would he also consider putting in the Library of the House a transcript of that inquiry, so that one may find out which prisoner was responsible for initiating the inquiry? There seems to be some misunderstanding about that.

Mr. Jenkins: One officer is employed as a reception officer, and one is employed on general discipline duties. With regard to the latter part of my hon. Friend's question, I will look at the matter, though I am not sure whether his suggestion would be appropriate. The


matter has been fully investigated, and I am sure that it does not call for further disciplinary action on my part.

Police Cyclists

Mr. Varley: asked the Secretary of State for the Home Department if he will consult with the police authorities with a view to making regulations on the supply to policemen who need to use cycles of more reflective material either on their uniforms or their cycles so as to minimise the danger to them when cycling in the hours of darkness.

Mr. Taverne: This is a matter for individual police authorities and at present I have no reason to think that regulations are needed. But if my hon. Friend has any additional information to give me, I shall be glad to consider it.

Mr. Varley: Will my hon. and learned Friend accept that there is a real danger on badly lit roads and country lanes to policemen and other road users, too? Will he watch the experiment currently going on in the Post Office, where they are trying out reflective material, fluorescent armbands, and that sort of thing?

Mr. Taverne: I think that this is certainly a matter which can be considered by the Police Uniform Committee which was recently set up by the Police Advisory Board.

Mr. John Burley

Mr. Russell Kerr: asked the Secretary of State for the Home Department whether he will now permit the admission to this country of Mr. John Burley, an Australian former employee of the illegal Smith régime in Rhodesia; and whether he will make a statement.

Mr. Foley: This is not a straightforward case, but, if Mr. Burley makes an application for an entry certificate, I am willing to give it sympathetic consideration.

Mr. Kerr: Is my hon. Friend aware that his Answer will be met with deep gratification, containing as it does the implication that a mistake was made by the immigration authorities on this occasion?

Mr. Foley: I should point out that Mr. Burley was refused admittance

because he did not have an entry certificate. He had been advised by the British High Commission in Salisbury that it was doubtful whether he would be admitted. In the light of further facts which have come to our attention, we have reached the decision which I have indicated.

Elections (Statistics)

Mr. Spriggs: asked the Secretary of State for the Home Department if he will take steps to enable returning officers to add information which will give in each case the number of people who did not vote at Parliamentary and local government elections.

Miss Bacon: Since the number of names on the electoral register is known, it is not difficult for anyone interested to make an approximate calculation for himself; and I am not persuaded of the need for putting any extra obligation on returning officers.

Mr. Spriggs: Does my right hon. Friend appreciate that it would cost nothing to add this information and to make it available to the whole country in view of the necessity to reach these people who do not appear to accept any responsibility at all, even at election time?

Miss Bacon: I think that the implication of what my hon. Friend is saying is that he not only wants the number of people who have not voted to be stated, but their names and addresses to be known, and I think that this would be asking a little too much.

Lorries (Abnormal Loads)

Mr. Roebuck: asked the Secretary of State for the Home Department if he will introduce legislation to enable him to recover from the owners of lorries with abnormal indivisible loads the cost of the police providing escorts.

Mr. Taverne: I do not think it would be appropriate to attempt to recover actual police costs in these cases, but my right hon. Friend the Minister of Transport is studying ways of reducing the nuisance to other road-users caused by loads of exceptional size and width.

Mr. Roebuck: Does my hon. and learned Friend think it proper that about £20,000 a year should come from public


funds in the Greater London Area as a form of subsidy to the road hauliers? Will he consider this matter again with a view to using this money to provide school crossing patrols, particularly in my constituency?

Mr. Taverne: The question of charging road hauliers fees for particular journeys or special loads is a matter for my right hon. Friend the Minister of Transport. I think that there is some danger in having charges directly related to services as this may lead to pressure to use police resources more for particular customers than for the public as a whole.

Advisory Council on the Penal System

Mr. Sharples: asked the Secretary of State for the Home Department if he will give the terms of reference and composition of the Standing Advisory Council on Penal Treatment.

Mr. Roy Jenkins: I am glad to be able to inform the House that Mr. Kenneth Younger has accepted my invitation to be Chairman of the Advisory Council on the Penal System. I hope to announce the names of the other members shortly.
The terms of reference of the Council are:
To make recommendations about such matters relating to the prevention of crime and the treatment of offenders as the Home Secretary may from time to time refer to it, or as the Council itself, after consultation with the Home Secretary, may decide to consider.

Mr. Sharples: Can the right hon. Gentleman say when he expects this advisory council to start its work?

Mr. Jenkins: I hope quite soon. I am sorry that I am not able to announce the full membership before the Recess, but I hope to be able to do so very soon.

Police Recruits (Height)

Mr. Brian Parkyn: asked the Secretary of State for the Home Department when he will make regulations to ensure that all police forces abandon height restrictions for recruits of 5 ft. 11 in., 5 ft. 10½ in., 5 ft. 10 in., etc., and instead have a standard height restriction of 5 ft. 8 in. so as to help reduce the man power shortage in the police forces of England and Wales.

Mr. Taverne: Most of the forces with a serious manpower problem take men of 5 ft. 8 in. My right hon. Friend proposes to review the matter when he has received the report of the Working Party on Manpower set up by the Police Advisory Board for England and Wales.

Mr. Parkyn: I thank my right hon. and learned Friend for that reply, but will he bear in mind that the number of convictions for indictable offences has gone down to only 39·2 per cent., whereas before the war it was more than 50 per cent.? Will he look at the question of bringing the police forces up to full complement as a matter of great urgency?

Mr. Taverne: We are looking at this as a matter of great urgency. This question of height will be considered at the end of the year, and it may be that we shall come to some definite conclusion at that stage.

Oral Answers to Questions — WINTER EMERGENCY COMMITTEE

Mr. Patrick Jenkin: asked the Prime Minister whether the Winter Emergency Committee will continue in being in the forthcoming winter season.

The Prime Minister (Mr. Harold Wilson): The work will be continued with a slight alteration in the Committee structure.

Mr. Jenkin: Is this Committee going to be something more than the rather hollow facade that it appeared to be last winter, and, if it is, will the Committee undertake an urgent investigation into the allocation of rail tipper wagons which, so I am informed, is going to lead to a serious shortage of solid fuel for domestic consumers, which will be more serious than the effects in many parts of London, including my constituency, last year?

The Prime Minister: I shall have the question of tipper wagons looked into. With regard to the Committee, I explained last year that one job it could not do in January, or the weeks immediately ahead of January, was to deal with the breakdown in the supply by a number of private contractors of plant which had been ordered for last year's programme. One of the changes in the Committee


structure will be to see that there is much more vigorous progressing of these private contracts so that we are not short of essential supplies, and that supplies do not break down because of defects at a time when they are most needed.

Oral Answers to Questions — MEMBERS (PECUNIARY INTERESTS AND EMOLUMENTS)

Mr. William Hamilton: asked the Prime Minister whether, in view of recent developments, he will recommend the appointment of a Royal Commission to inquire into the practicability and desirability of instituting an official register of hon. Members' pecuniary interests in and emoluments received from outside groups.

The Prime Minister: I do not think this would be appropriate, Sir.

Mr. Hamilton: Why does my right hon. Friend not think it appropriate? Is it not the case that such a register would demonstrate the relative lack of corruption in British politics? Is it not an absurd anomaly that local councillors cannot discuss council house rents if they live in council houses, but directors, managing directors, and chairmen of companies can vote their firms and their industries millions of £s of public money by declaring an interest and being allowed to vote in this House?

The Prime Minister: I think that the incorruptibility of the British Parliament is widely recognised all over the world, whether there is such a register or not. I think that the only problem which has arisen from time to time, and it has been debated and discussed, is the need for hon. Members on both sides of the House to know, if they are approached by another hon. Member, or entertained by him, whether he has any particular interest on the public relations side. I think that a great deal has been done to improve that situation, so that Members are not accosted unawares.

Sir R. Cary: Does the right hon. Gentleman agree that there is something indelicate, improper, and impertinent in this Question, implying as it does that association with a union, a company, or

an institution outside this House is wrong and improper?

The Prime Minister: I am sure that there were no indelicate, improper and impertinent thoughts in the mind of my hon. Friend.
Everyone knows the great expertise which the hon. Gentleman has shown in our debates. I have heard him many times on the question of road passenger haulage, and he has had the satisfaction of seeing this Government introduce the principle of a refund on bus fares in connection with oil duties for which he pressed so unsuccessfully for so many years before we came to power.

Mr. William Price: Does my right hon. Friend appreciate that his reply will cause concern on this side of the House? Does he not realise that many of us are becoming sick of hearing some Members, on both sides of the House, attacking other people's pay rises, when they themselves are enjoying vast sums of non-corruptible income, very often from more than one source? May we have a little less hypocrisy, and a little more honesty?

The Prime Minister: I am not responsible for what hon. Members in any part of the House may say about pay rises, but, since my hon. Friend is so well informed on the financial status of hon. Members who make these speeches, I do not think that it is necessary to have a register.

Sir G. Nabarro: While dissociating myself from the impurities alleged by my hon. Friend, may I ask whether the Prime Minister would agree that useful progress could be made in this matter if the financial subventions of Members of this House acting on behalf of and with trades unions were publicly declared?

Hon. Members: They are.

The Prime Minister: I think that one of the basic facts of the political situation, particularly in regard to trade union relations with the Labour Party and the Parliamentary Labour Party on the one hand and the business affiliations of the Conservative Party on the other, is that the facts are all known about the Labour Party. They are not known with regard to the Conservative Party.

Oral Answers to Questions — RHODESIA

Mr. Winnick: asked the Prime Minister what is the latest position with regard to talks between Great Britain and the illegal régime in Rhodesia.

The Prime Minister: I would ask my hon. Friend to await the statement which I shall be making before the House adjourns for the Summer Recess.

Mr. Winnick: Is my right hon. Friend aware that there is a good deal of concern in the country that the present illegal régime in Rhodesia could be given legal independence? Could he now give a guarantee that the racialist politicians who rule Rhodesia will never be granted independence by a British Government?

The Prime Minister: I suggest that my hon. Friend awaits my statement next week. However, I have made clear on a number of occasions that it would not be the wish of the Government or of the House as a whole, I am certain, that we should legalise what was an illegal act. Any talks which go on continue on the basis of the six principles which both parties and both Governments have accepted.

Mr. Wall: Why is there this further delay? The right hon. Gentleman promised that these talks would start last month. Will the Government make a specific suggestion to Mr. Smith?

The Prime Minister: The right hon. Gentleman had better await my statement next week. The time has been well spent in the preparation of the next phase. I hope to say a little more next week, although perhaps not as much as I hope to say on a later occasion.

Mr. Heath: Would the right hon. Gentleman say when he hopes to make a statement? He will recall that when I last raised this matter he said that he hoped to make it in time for the Opposition to debate it, if they so wished, before the House rose. This is becoming more and more difficult.

The Prime Minister: I hope to make the statement on Monday of next week.

Mr. Gwilym Roberts: asked the Prime Minister what discussions have taken place with the South African

Government on the operation of sanctions against Rhodesia.

The Prime Minister: It is contrary to practice to make public confidential diplomatic exchanges.

Mr. Roberts: Is my right hon. Friend aware that there is very considerable feeling on this side of the House—we are very concerned—about the considerable help which has been given by the South African Government to Rhodesia in terms of oil and also, possibly, in terms of armaments?

The Prime Minister: I have previously explained to the House some of the problems in this respect. The South African Government have not accepted, as most other countries have, the oil sanction, the cut-off of oil to Rhodesia. Oil has been going through, although at a very high price and very costly to the régime. But the South African Government have explained that it is their policy to allow normal, but not abnormal, trade, whether in oil or anything else to Rhodesia.

Mr. Fisher: Can the right hon. Gentleman throw any light on the stories which are now circulating that large quantities of oil are being exported from South Africa to Rhodesia via Bechuanaland? If these stories are true, is it not a scandal in a British Colony over which we still have control? How can it be reconciled with Government policy?

The Prime Minister: We have been watching this very carefully. Some of the figures and stories which I have seen have been vastly exaggerated compared with the relatively small amounts going through Bechuanaland. One of the big problems has been oil going through Lorenzo Marques, passing from there into South Africa and from there to Rhodesia. This is the biggest problem, but it would mean action by both Portugal or South Africa, or one of them, at any rate.

Mr. Gwilym Roberts: asked the Prime Minister if he will give an assurance that there will be full consultation with African leaders in the area before the conclusion of a Rhodesian agreement.

The Prime Minister: Her Majesty's Government stand by the fifth principle


that any solution must be acceptable to the people of Rhodesia as a whole. They will need to be fully satisfied about African opinion and the means whereby it is ascertained.

Mr. Roberts: I am grateful to my right hon. Friend for that statement. Is he aware that the feeling above all others, on this side of the House at any rate, is that any settlement reached in Rhodesia must be acceptable to the people of Rhodesia as a whole?

The Prime Minister: When I was in Salisbury I met all the leaders of the African nationalist parties and many other African political leaders. The talks which we have been having were designed to see with whom any negotiations should be conducted. The question of consulting African opinion is one of the key issues in those talks.

Mr. Wall: asked the Prime Minister if he will make a statement on the resumption of talks with Mr. Smith's Government.

The Prime Minister: I would ask the hon. Member to await the statement which I shall be making before the House adjourns for the summer Recess.

Oral Answers to Questions — BUILDING MATERIALS

Mr. Chichester-Clark: asked the Prime Minister whether he will appoint a Minister of State to advise upon the supply and production rate of building materials.

The Prime Minister: No, Sir.

Mr. Chichester-Clark: Is the Prime Minister aware and will he admit that what the building producers and others concerned with the housing programme need most is an indication as to whether building society mortgage rates are to be frozen, because of the effect on next year's housing programme?

The Prime Minister: The Question related to the appointment of a Minister to deal with building materials. The hon. Gentleman will be aware that over the last two months not only has the housing situation improved considerably but also that there has been a reduction in the stocks of building materials which are still, of course, adequate.

Oral Answers to Questions — PRIME MINISTER (SPEECH)

Mr. Bruce-Gardyne: asked the Prime Minister if he will place in the Library a copy of his public speech on 12th July to the Australia Club on the state of the British economy.

Mr. Ridley: asked the Prime Minister if he will place a copy in the Library of his public speech to the Australia Club on 12th July about the economic situation.

The Prime Minister: I did so two days after making the speech, Sir.

Mr. Bruce-Gardyne: Is the Prime Minister aware that I have been rereading the speech with great interest? He will no doubt recall that, in that speech, he referred to the "moaning Minnies and wet editorials", in a typically elegant phrase. Has he worked out how much money he would have saved the reserves if he had taken the advice of these people more promptly? Does he not owe them an apology?

The Prime Minister: I am glad that the hon. Gentleman read the speech, even if he did not use the one in the Library. The wet editorial which I had in mind was one in the Observer the Sunday before I made the speech, which suggested that the £ was over-valued and ought to be devalued. I thought that this was particularly wet and particularly irrelevant. I thought that, since we have increased our exports to the most competitive market of all—the United States—by 40 per cent. in the last 18 months, the term "wet" was a very kind appellation to apply to that editorial.

Mr. Ridley: Does the right hon. Gentleman recall saying in that speech that the "sell Britain short brigade" seemed incapable of looking beyond their own noses? How far beyond his own nose does he think he saw when he told the Press that all was well—a week before the eve of the worst crisis in our economic history?

The Prime Minister: I certainly did not tell the Press on that occasion a week before that all was well. In that speech, I said that anyone who doubted our resolve and determination would be wrong. This was proved by the measures


which we have taken. On the "knock Britain brigade", I think that this country has suffered as a result of a lot of anti-British propaganda at home and abroad and one has not to look very far from where I am standing now to see some of the brigadiers opposite who have played a leading part in it.

Oral Answers to Questions — WALES (INDEPENDENT PARLIAMENT)

Mr. Gwynfor Evans: asked the Prime Minister if he will introduce legislation to give an independent Parliament to Wales.

The Prime Minister: No, Sir.

Mr. Evans: In view of the fact that three candidates in the recent Carmarthen election who supported a Parliament for Wales were given 95 per cent. of the vote, in view of the appalling record of a long succession of London Governments in Wales, and as Wales as a nation has a moral right to self-government, will not the Prime Minister give this matter urgent consideration?

The Prime Minister: While no one will query the mandate which the hon. Gentleman received in his own constituency, I am not aware that there are any other hon. Members of this House who were elected under the same mandate. We should need more than one vote to carry through this particular legislation. I should, perhaps, also make it clear to the hon. Gentleman that whatever may be his disappointment with certain previous Governments from the Welsh point of view, he will, I think, be the first to acknowledge that a great deal has been done in the last two years in getting more and more industry established in Wales, as the facts and figures will testify.

Mr. James Griffiths: Is my right hon. Friend aware that the overwhelming majority of the Welsh people deeply appreciate that he has given fuller recognition to Wales than any previous Administration? Does my right hon. Friend agree that the best advice I could now give to my compatriot is to ask him to co-operate with the Secretary of State for Wales to bring about an effective reform of local government in Wales, including, if so desired, a

Regional Council, rather than to chase will o'wisps?

The Prime Minister: I certainly agree with my right hon. Friend's remarks about local government. As to economic development in Wales, my right hon. Friend the President of the Board of Trade in the debate two days ago gave some very encouraging figures. I am not sure if the hon. Member for Carmarthen (Mr. Gwynfor Evans) was in the House to hear the figures given by my right hon. Friend.

Mr. Gibson-Watt: Will the Prime Minister accept that the people of Wales recognise that the future prosperity of that country lies in Wales being linked with the fortunes of the rest of the United Kingdom? Will he say why the present Government have consistently restricted debate on Welsh problems throughout this Parliament and why they have held up reports of vital interest to Wales?

The Prime Minister: I agree with the hon. Gentleman's first remarks. In regard to debates on Wales, my understanding is that the normal practice has been followed, but that, in addition, and in accordance with the principle of linking Wales with the rest of Britain in economic prosperity, Wales has played a very leading part in the debates on development areas and other economic matters in recent weeks. As to reports, if the hon. Gentleman will let me have particulars, I will certainly inquire into them.

Mr. J. Idwal Jones: Is my right hon. Friend aware that the people of Wales have not yet expressed their desire for a Parliament for Wales? Is he aware that, when the last petition in favour of a Parliament for Wales was submitted to Parliament, less than 10 per cent. of the people of Wales had signed it, and that, of the Welsh electorate, less than 13 per cent. had signed?

The Prime Minister: I am grateful to my hon. Friend for that information. I am also aware of the way in which Wales voted at the General Election.

Mr. Thorpe: If the Prime Minister is prepared to perpetuate a Tory rotten borough in a third of Ireland, why should he not be prepared to give an independent and proud nation its own Parliament?


Surely—and I speak as one who has some Welsh blood in his veins—if we are to tolerate a Belfast Parliament, why should not the Welsh nation have its own Parliament as well?

The Prime Minister: If the hon. Gentleman wishes to put down specific Questions about Northern Ireland and Stormont which come within the jurisdiction of Her Majesty's Government at Westminster, I will do my best to answer them. However, I thought that the rest of his question represented a string of non sequiturs.

Several Hon. Members: rose——

Mr. Speaker: Order. Questions even on Wales must be short.

BUSINESS OF THE HOUSE

Mr. Heath: May I ask the Leader of the House to state the business of the House for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Herbert Bowden: Yes, Sir, The business for next week will be as follows:
MONDAY, 8TH AUGUST—Committee and remaining stages of the Consolidated Fund (Appropriation) Bill.
There will be a debate on Crime, until about eight o'clock, to be followed by subjects which hon. Members may wish to raise.
TUESDAY, 9TH AUGUST—It is hoped that it will be possible to proceed with the remaining stages of the Prices and Incomes Bill, which may be concluded on Wednesday, 10th August.
THURSDAY, 11TH AUGUST—Second Reading of the Industrial Reorganisation Corporation Bill.
Lords Amendments to the Industrial Development Bill.

Motion on the Valuation (Scottish Gas Board) (Scotland) Order.

I shall make a further business statement as soon as possible about such further sittings as may be necessary.

Mr. Heath: Does the right hon. Gentleman realise that it is somewhat extraordinary for him not to be able to

state the business even for a whole week? Is this not yet a further mark of the confusion and chaos which exists over the handling of business? Will he endeavour to make a further statement, as soon as possible next week, for the convenience of right hon. and hon. Members?

Mr. Bowden: The House will appreciate that this was purely a precautionary statement. If I could help the House, I would say that, subject to progress, the House will rise on Friday, 12th August, until Tuesday, 18th October.

Mr. Shinwell: May I ask my right hon. Friend two questions about business? First, is it the intention of the Government to make a statement about the appointment of a shipbuilding industry board before we rise for the Summer Recess?
Secondly, has my right hon. Friend's attention been drawn to the Motion standing on the Order Paper in the names of several of my hon. and right hon. Friends and myself, referring to a statement made in the Daily Express—

[That this House, noting that the United States Embassy in London issued a statement to the effect that a report in the Daily Express purporting to emanate from that Embassy was utterly and completely without foundation, deplores the action of this newspaper in publishing a false and irresponsible report, the falsity of which could easily have been established by a telephone call to the United States Embassy; further deplores the conduct of the Daily Express in its later edition of Friday 29th July, and in its edition of Saturday 30th July, in persisting in the false report after it was aware of its falsity; and is convinced that such conduct betrays the normally high standard of professional journalism in this country.]—

which was subsequently proved to be false and which was repeated again by that newspaper?

Will my right hon. Friend provide an opportunity for a debate before the Recess, and, if not, will he refer the matter to the Press Council?

Mr. Bowden: To answer my right hon. Friend's first question, the President of the Board of Trade will be making a statement next week. To answer his


second question, I have seen the Motion to which he referred and have read the account in the Daily Express.
The whole House will agree that this sort of journalism—which was, of course, corrected by a statement from the American Embassy—is serious and could be dangerous. It is open to any member of the public to report any matter, if it is thought right to do so, to the Press Council.

Mr. Gwynfor Evans: Has the right hon. Gentleman's notice been drawn to Motion No. 199 concerning the official status of the Welsh language?

[That, in view of the acceptance by the Government of the principle of the equal validity in Wales of the Welsh and English languages, and of the steps which the Government is taking to give official recognition to the Welsh language in ways which include the preparation of official forms in the national language of Wales, this House deplores the sentences of imprisonment imposed by the magistrates' courts in Wales on citizens who had refused to pay their car licences until Welsh forms were provided.]

In view of the deep and widespread feeling that has been aroused in Wales by sentences on young people, who have made a stand for what is a natural and elementary right, would the Leader of the House draw the attention of the Attorney-General to this situation?

Mr. Bowden: I am grateful to the hon. Gentleman for quoting the number of the Motion, which is of considerable help when there are about 200 such Motions on the Order Paper. The Report to which he referred was debated in the Welsh Grand Committee last December and the necessary administrative action is being taken about these forms. I will communicate with my right hon. and learned Friend the Attorney-General about the hon. Gentleman's other point.

Mr. Michael Foot: While I appreciate that the Leader of the House has stated only tentatively the time which is to be allotted next week for further debate on the Prices and Incomes Bill, may I ask whether he will take into account that it is not yet possible for hon. Members in any part of the House to determine what

Amendments they may wish to put down on Report? Therefore, will he reserve the question whether further time should be allocated in order to see how many Amendments are put down, and what is the result of the Committee stage? Further, will he give a full undertaking that there will be no abbreviation of any discussion that the House might wish to have on this subject?

Mr. Bowden: It is precisely because we have not yet had the Committee's report on the Bill, or seen the Amendments tabled for the Report stage, or the selection of those Amendments, that I said that it was hoped that it would be possible.

Dame Irene Ward: In view of the success of all sections of the shipbuilding and shipping industries in resolving some of their problems, would it not be a good idea to have a debate on success instead of always having to debate failures?

Mr. Bowden: The demarcation agreement is a marked success within the last week or 10 days. I cannot promise a date before the Summer Recess, but, as I have said, my right hon. Friend is to make a statement.

Mrs. Renée Short: Can my right hon. Friend tell the House how soon after the Summer Recess we can expect the legislation promised by my right hon. Friend the Minister of Health in connection with the prescribing of drugs by general practitioners?

Mr. Bowden: I cannot at this moment give the actual date of the introduction of the Bill, but it is being prepared and will be introduced without any unnecessary delay.

Mr. R. Carr: Is the Leader of the House aware that while we have now had a statement from the Minister of Aviation on one of the important issues I raised last week, we still await a statement about the future ownership structure of the aviation industry? Can the right hon. Gentleman say whether we shall have a statement about this before the Summer Recess? If not, can he assure us that a statement on such an important and possibly controversial matter will be made in the first place in the House of Commons?

Mr. Bowden: I cannot add very much to what I said last week. The right hon. Gentleman has correctly said that the first part of the statement has been made, and I will discuss the second part with my right hon. Friend.

Mr. Iain Macleod: Is the Leader of the House aware that he did not answer the third and most important part of the question put by the hon. Member for Ebbw Vale (Mr. Michael Foot): will he give an undertaking that there will be no restriction on debate when we come to the Report stage and Third Reading of the Prices and Incomes Bill?

Mr. Bowden: I will give an undertaking that when we have seen the Amendments on Report, and their selection, adequate time will be provided; and that the amount of time will, in the usual way, be discussed through the usual channels.

Mr. George Jeger: Does my right hon. Friend recall that last week we were promised a statement before the Summer Recess on the talks between ourselves and Spain over Gibraltar? In view of the concern felt in Gibraltar about the rumours of offers and concessions which have been made and rejected, when will we have that statement?

Mr. Bowden: I am aware of the promise made, and I am communicating with my right hon. Friend the Foreign Secretary to see on which day next week the statement will be made.

Sir D. Glover: After the disastrous vote last night—when even the Prime Minister apeared to have deliberately abstained—and as the Leader of the House has been unable to answer the question of the hon. Member for Ebbw Vale (Mr. Michael Foot), will he, even at this late stage, bring back the Committee stage of the Prices and Incomes Bill to the Floor of the House?

Mr. Bowden: No, Sir. The House has now taken a decision on two Motions on this subject moved from the other side of the Chamber, and on two occasions has decided that the Bill should be dealt with in Standing Committee.

Mr. Whitaker: In view of the Prime Minister's statement last month that the House was deliberately misled over the

Suez operation, and as new evidence has come to light to substantiate that statement, will my right hon. Friend, despite pressure on legislative time, afford time to right hon. Members opposite to make personal statements?

Mr. Bowden: The question of a personal statement is not a matter for me. If any hon. Member from either side wishes to make a personal statement, time is usually accorded to him by Mr. Speaker.
On the general question of a debate on the Suez situation, although this incident took place rather a long time ago it is still of great interest, and it might be possible to find a little time after the Summer Recess.

Mr. Godber: In view of the statement made last week by the Leader of the House that the Government could not find time before the Summer Recess to discuss the Brambell Report, can he give the House an assurance that the Minister of Agriculture will state the Government's intention in this respect before we rise for the Summer Recess?

Mr. Bowden: Yes, Sir. It is the intention of my right hon. Friend to do so.

Mr. E. Rowlands: Is my right hon. Friend aware that there is grave disappointment that the Bill on leasehold reform has not yet been introduced? Will he give an assurance that it will be introduced before Christmas?

Mr. Bowden: I cannot promise a Second Reading before Christmas. If the Bill is ready, we will certainly have it, but let us get the Land Commission Bill on the Floor of the House and then in another place, before we start on leasehold reform.

Mr. Boyd-Carpenter: For the convenience of hon. Members, can the Leader of the House say what procedural Motions he proposes to table late tonight for us to take tomorrow morning?

Mr. Bowden: None that I am aware of at the moment.

Mr. Hooley: Has my right hon. Friend seen my Motion No. 180, on Rhodesia, which has attracted considerable attention, though not entire support, on both sides of the House? Will he undertake


that the House will have an opportunity to debate this subject before the Summer Recess?

[That this House, noting the imminence of the Commonwealth Prime Ministers' conference and the intention of Her Majesty's Government to resume investigatory talks with Rhodesian officials, believes that any solution to the problem of Rhodesia must be acceptable to the majority of Africans in the country and that no action beyond investigatory talks should be taken without recalling the House of Commons, and reaffirms its convictions that sanctions must be intensified until constitutional government is restored and that a period of direct rule will be necessary as a transitional stage between the present illegal régime and democratic elections of a new and representative government.]

Mr. Bowden: I think that we had better await the statement to be made by my right hon. Friend the Prime Minister on Monday next.

Mr. Kershaw: The right hon. Gentleman will have seen reports that decisions may be taken about the strength of our Army in Germany during the Summer Recess. In view of the importance of this to foreign policy, will he give an undertaking that the House will have an opportunity to debate the matter before the decision is finally made?

Mr. Bowden: We may consider this, but I cannot make any firm promise.

Mr. C. Rowland: Without wishing to press the Leader of the House for a debate on Rhodesia—[HON. MEMBERS: "Why not?"]—may I ask you, Mr. Speaker, whether it would be possible for you to give some latitude next Monday, after the Prime Minister's statement, for questions to the Prime Minister on the subject, so that the main strands of opinion may be articulated before the Commonwealth Prime Ministers' conference?

Mr. Speaker: At the moment, we are having business questions to the Leader of the House.

Mr. McMaster: In view of the importance of shipbuilding to the economy, and the concern felt about the effects on it of the credit squeeze, and as the Geddes

Report was published in March but has not yet been debated here, can the Leader of the House arrange for even a short time for a debate?

Mr. Bowden: I cannot promise time before the Summer Recess. There are, of course, the normal opportunities in connection with the Consolidated Fund (Appropriation) Bill and during the Adjournment half-hour.

Mr. Roebuck: Is my right hon. Friend aware that the nation as a whole is most anxious to co-operate with the Government in their prices and incomes proposals? Will he therefore undertake to do everything possible to secure the quick passage of this legislation through the House?

Mr. Bowden: I said in yesterday's debate that it is the Government's intention to obtain the Royal Assent to the Bill before we rise for the Summer Recess.

Mr. Ogden: Is my right hon. Friend aware that several hon. Members in Standing Committee B have already cancelled their weekend constituency arrangements so that we may be available in London, if necessary? Will my right hon. Friend also table the necessary Motion so that if we are not able to conclude our proceedings by midnight tomorrow, we may be able to continue on Saturday and Sunday?

Mr. Bowden: I do not think that we should take any firm decision at this moment. There are a number of hours left between now and tomorrow night. We had better await developments.

PARLIAMENTARY COMMISSIONER

The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement about the proposed office of Parliamentary Commissioner.
As the House is aware, the Parliamentary Commissioner Bill was given its First Reading on 20th July, but, for reasons the House will understand, the Bill cannot now make further progress before the Summer Recess. It is, however, the Government's firm intention to


press ahead with this administrative reform, and to afford the necessary Parliamentary time for the Bill to pass through all its stages in both Houses by the end of the year.
In view of this, and the great importance attached both by the House and by many outside, to the earliest possible introduction of this improvement in our administrative procedures, it has been decided that the first Parliamentary Commissioner ought now to be designated. This will enable him to make as much progress as possible with the establishment of the necessary administrative arrangements and the staffing of his office before the Bill becomes law. The formal appointment of the Parliamentary Commissioner, which will require the approval of Her Majesty the Queen, must, of course, await the passage of the Bill.
I need hardly add that this decision in no way interferes with the freedom of Parliament to consider all the details of the proposed legislation in the normal way. But the choice of the Parliamentary Commissioner himself is, we think, a separate matter within the responsibility of Her Majesty's Government and the advantages of an early appointment are clear.
As the House is aware, our intention is that the Parliamentary Commissioner's should not be a judicial office, but a characteristic Parliamentary institution, carrying a high degree of independence. The Commissioner will be an Officer of this House, dealing with complaints transmitted to him by hon. Members and reporting back both to hon. Members individually, to the House as a whole, and to whatever Select Committee the House may appoint. It is, therefore, of the greatest importance that the first holder of this office, who will inevitably play a special part in establishing the traditions of a new institution, should be someone who fully understands this House and its workings, and who, at the same time, will be immediately capable of working with Government Departments in the course of his investigations.
I have reached the conclusion, and I am confident that my view will be shared by hon. Members generally, that the best possible appointment that can be made for

this purpose is that of Sir Edmund Compton, the present Comptroller and Auditor General. I believe that he enjoys the confidence of this House in a high degree, and, in particular, I know that past and present members of the Select Committee on Public Accounts have a lively appreciation of his great efficiency, independence and complete loyalty to the service of the House. I am also most pleased to be able to inform the House that Her Majesty the Queen has graciously indicated her willingness to approve this appointment when the necessary legislation has been passed.
We propose that Sir Edmund Compton should take up his appointment as Parliamentary Commissioner-designate from 1st September though he will not, of course, be able to receive or consider complaints until the Bill receives the Royal Assent. Until the legislation can be passed—when the intention is that he should be paid on the Consolidated Fund—his salary will be voted by Parliament.
I commend these arrangements to the House.

Mr. Heath: May I express my agreement with the Prime Minister that Sir Edmund Compton has earned the admiration and respect of the House in the work he has done? May I also express agreement with the Prime Minister that the announcement he has just made should in no way be allowed to influence hon. Members in any action which they may wish to take on the Bill when it comes before the House and that no Amendments which they may move should be taken as in any way a criticism of Sir Edmund himself? I hope that this may be clearly established.
Will the Prime Minister, after today, return to the normal constitutional practice of saying "if" a Bill passes the House rather than "when"?

The Prime Minister: Yes, of course. The Bill will be completely under the control of the House as to its passage and amendment. I am grateful to the right hon. Member for what he said about Sir Edmund who, I think, enjoys the confidence of the House as a whole. Certainly, it will be recognised, I think, that if any Member, in the interests of improving the Bill by amendment, wants to make changes, he would be doing so in the interests of the Bill as a whole and in the


working of the institution and that that would be in no sense a reflection on Sir Edmund.

Sir T. Brinton: It seems unfortunate that an announcement of this nature should be made at the moment. Does the Prime Minister agree that this is yet another example of assuming that because the Government have decided to do something it will automatically go through this House? Is this not another slight on the power of this House? Why was it necessary to announce this appointment now?

The Prime Minister: There are abundant precedents for making preparation in advance for particular decisions of Parliament, always subject, of course, to the ultimate authority of Parliament, which can set aside any such proposition and render nugatory any arrangements which have been made, but, in view of what I understand to be general support in the country and by hon. Members that this office is an important one and we want to make it work, I should hope that when the Bill goes through, if it is agreed by the House at that time, we should then be ready to swing into action with the necessary administrative arrangements. As I say, there have been abundant precedents where an organising committee has been appointed ahead of a board in the expectation and hope that a Bill would be legislated by Parliament. This has happened under successive Governments.

Mr. Grimond: Is the Prime Minister aware that, whatever he may say, this is an interference with the freedom of Parliament? He cannot claim—[Interruption.] This is of some importance to hon. Members. He cannot claim that this is a sudden decision, forced on him by a new emergency. This was in his party's programme for 20 months.
Is the right hon. Gentleman also aware that there are widely held divergencies of opinion in the House as to the nature and functions of this office and that according to how the House decides the office should be discharged this must have a bearing on who should discharge it? Will it not put this distinguished gentleman in a most awkward position if the House decides that it does not want the Bill in principle or perhaps amends it and it requires a different type of person to discharge the office?

The Prime Minister: I do not think that it puts the House in any difficulty. There have been many occasions when Bills infinitely more controversial than this have been brought before the House and there has been some planning of the necessary administrative arrangements. Of course, if there are hon. Members who feel that we should not have a Parliamentary Commissioner, but that we should have an ombudsman or anything of that kind, and it should be a judicial office, obviously, if the House so decided, it would mean that we should have to reconsider the arrangements. The appointment, of course, in all these cases is a matter for the Government and the legislation is a matter for the House. I think that we had better see how we get on with the legislation.

Mr. Sharples: While fully appreciating the particular qualification of Sir Edmund Compton for this office, can the Prime Minister say whether there are any precedents for a constitutional appointment of this kind to be made in advance of legislation approved by this House?

The Prime Minister: The only real precedent of a similar character is that of the Comptroller and Auditor General. Since the legislation was passed as long ago as 1861—and 1866 in the case of the Department—I should have to look back a long way to see what the precedent was on that occasion. Certainly, the rights of hon. Members would not be prejudiced either on the legislation or on the question of voting the necessary funds for the Parliamentary Commissioner-designate to be doing preparatory work.

Mr. C. Rowland: What terms of appointment have been offered and have been accepted?

The Prime Minister: Sir Edmund, who already has the office under this House of Comptroller and Auditor General understands that the proposal will be—this is a matter of appointment under Letters Patent—with the rank equivalent to that of Comptroller and Auditor General.

Mrs. Knight: Is the Prime Minister aware that a great many people who at this time have been hit by the wage and prices freeze will be very angry indeed at the thought of vast funds being paid


in salaries which are not even paid at this time?

The Prime Minister: I am not aware that many members of the general public really feel aggrieved at the prices freeze—[HON. MEMBERS: "Oh."]. I think that most people in the country would like to see prices, after many years, held at a constant figure. I certainly do not feel that this will lead to very big demands in terms of staff. Very large numbers of people feel that they have grievances which they want examined against a bureaucracy. Whatever Government are in power, the size of Government makes it more essential to protect the individual by independent investigation. That is what we are doing.

Mr. McNamara: Is my right hon. Friend aware that for the reasons he has just given his announcement today will be welcomed by many people throughout the country?

Mr. Hastings: While agreeing that it may be necessary for Sir Edmund Compton to study this problem ahead of time and ahead of appointment, and supposing that the Bill will be passed, why is it necessary to make a public announcement? Does the Prime Minister realise that many people will think that this is an attempt to take the eyes of the people off the present disaster, chaos and lack of policy?

The Prime Minister: The reason why it is necessary to make this announcement is that if Sir Edmund is to do his preparatory work adequately he cannot also discharge at the same time the services which he owes to the House as Comptroller and Auditor General. That is why it has been necessary to make an announcement. Of course, an appointment can be made by a notice in the Press, but I thought that since the question of a Parliamentary Commissioner was so involved in the work of hon. Members, the House would like to have a full statement from me. That is why I made it this afternoon.

Mr. Sandys: This is a very surprising announcement. Can the Prime Minister tell us precisely what are the considerations which make it impossible to wait a few months until the Bill has passed

the House and which justify treating the House of Commons just as a rubber stamp?

The Prime Minister: There is no question of treating the House of Commons as a rubber stamp, despite the long experience of the right hon. Gentleman in trying to do so. The considerations about which he asks are, as I have said, that there is widespread interest in this matter. I believe that there are many individual members of the public who will want to have their cases examined. It would be very serious if we waited until after getting the legislation and then had to spend several months more getting the machinery into existence and disappoint people who have urgent cases to examine.

Mr. Boyd-Carpenter: The Prime Minister will be aware from his own experience on the Public Accounts Committee that, whatever hon. Members may think of either the nature of his announcement or of the nature of the job itself, the House generally will feel that he has selected a very able and devoted official. Is the right hon. Gentleman aware that the House in general, and the Public Accounts Committee, in particular, owes Sir Edmund Compton a very great debt of gratitude for his services during the last eight years and that the Committee, in particular, will miss him a great deal?

The Prime Minister: I thank the right hon. Gentleman for what he has said. I am sure that he was speaking not only for the present members of the Public Accounts Committee, but for all members of the Public Accounts Committee at various times over these past eight years. It is precisely because of his independence and his success in helping to make that Committee so great a success, as it has been throughout the years, that I felt that, if Parliament approved the Parliamentary Commissioner Bill in the form in which it is presented, Sir Edmund will be the ideal person for helping any new Select Committee the House may wish to appoint.

Mr. Molloy: Is my right hon. Friend aware that this whole proposition for a Parliamentary Commissioner has caught the imagination of the public?[Laughter.] Yes, indeed. The further announcement by my right hon. Friend this afternoon will also be recognised as a sensible


thing to do. The real reason behind the many petulant questions which have been put to my right hon. Friend by both Liberals and Tories is that they are green with envy because they did not think of the idea in the first place.

The Prime Minister: Without going into the whole of what my hon. Friend said in his question, I think that it is a little unfair to hon. Members opposite to say that they did not think of it in the first place. It was brought to their attention and turned down by them.

Dame Irene Ward: While reserving my judgment and adding my warm congratulations to Sir Edmund Compton, under whom I, too, have served, if that is the correct expression, may I ask the Prime Minister whether, if we are to have a successor to Sir Edmund, what is to happen to the Public Accounts Committee if the Government take away its main servant without appointing anybody in his place? It will be chaos worse confounded.

The Prime Minister: In the normal course, when a vacancy occurs in the office of Comptroller and Auditor General, it will be for the Government to submit the name of the successor to Her Majesty and then to announce it.

Mr. Turton: Will the Prime Minister make it clear whether Sir Edmund has been asked to resign his office as Comptroller and Auditor General in expectation of an appointment which has not been debated in the House on Second Reading, nor have the details of the appointment been defined in Committee?

The Prime Minister: Sir Edmund fully understands the position. No one understands the working and practices of Parliament better than he.[HON. MEMBERS: "Answer."] I think that Sir Edmund understands the constitutional position as well as any hon. Member opposite. The position is that, if Parliament refused, in its wisdom, to give passage to the Bill or altered the Bill so fundamentally that there would not be a

Parliamentary Commissioner, but perhaps a judge, then this would create a difficult situation. However, Sir Edmund fully understands the position, has accepted it on those terms, and was not willing to try to combine with his present very exacting duties the preparatory work against the day when Parliament decided to legislate the Bill, if it decides to do so.

Sir D. Renton: What will be the authority for the expenditure of any money by the Parliamentary Commissioner-designate or by any staff whom he may engage between 1st September next and such date as a Money Resolution is passed by the House on the Bill which will eventually be brought before us?

The Prime Minister: Exactly as in past cases, the money will have to be voted by Parliament at the earliest possible opportunity, and Parliament will be free to reject such a vote. From 1st September until that vote occurs, the money can be advanced, as in past cases, under the Civil Contingencies Fund.

Several Hon. Members: Several Hon. Members rose——

Mr. Speaker: Order. We must get on.

BILL PRESENTED

FILMS

Bill to extend the periods during which loans, advances and orders may be made under the Cinematograph Films Production (Special Loans) Acts 1949 to 1957, a levy is to be imposed under the Cinematograph Films Act 1957 and a quota of British films is to be maintained under the Films Acts 1960 and 1964; to raise the limit of exemptions from the quota; to increase the maximum fee payable on an application for the registration of a co-production film; and for connected purposes, presented by Mr. Douglas Jay; supported by Mr. William Ross, Mr. Cledwyn Hughes, Mr. Anthony Wedgwood Benn, Mr. Niall MacDermot and Mr. Roy Mason; read the First time; to be read a Second time Tomorrow and to be printed.[Bill 104.]

Orders of the Day — SELECTIVE EMPLOYMENT PAYMENTS BILL

As amended, considered.

4.5 p.m.

Mr. Speaker: Before I call—[Interruption.] Order. Will hon. Members please leave the Chamber quietly.
Before I call the first new Clause which is selected, it might be for the convenience of the House if I indicate how the provisions of the guillotine Order will apply today.
The time which has elapsed between 3.30 this afternoon and the beginning of the consideration of the Bill has to be added to the time laid down in the Order of the House of 19th July. The result is that tonight the Chair is bound, by Order of the House, to end the consideration stage of the Bill at 37 minutes after 8.30, for that is the time which has passed since 3.30 today. The Question for the Third Reading of the Bill has to be put at 37 minutes after 11.30 p.m. tonight.
The House must also appreciate that when the Guillotine falls the question under discussion at that moment is disposed of in the usual way, but thereafter the Question on any Amendment moved by a member of the Government has to be put in the form "that the Amendment be made".
The first Amendment selected is new Clause 1. I think that it will be for the convenience of the House if, with this new Clause, we discuss new Clause 2—Reduction in cost of clerical work for local authorities—new Clause 6—Electrical and gas contracting and retailing public bodies—Amendment No. 73, in Clause 4, page 5, line 38, after "to", insert "but not in excess of".

Amendment No. 74 in line 38, after "paid", insert "in any week".

Amendment No. 106, in Schedule 1, page 16, line 40, at end insert:
Premises or parts of premises occupied by bodies to which section 3 applies which constitute an establishment where more than half of the employed persons employed for the purposes of that establishment are normally so employed only in non-qualifying activities.

Amendment No. 114, in Clause 4, page 5, line 35, leave out "may" and insert "shall".

And Amendment No. 115, in line 36, leave out from "payments" to "to" in line 38, and insert: "as an equal".

New Clause.—(REDUCTION IN COST OF CIVIL SERVANTS.)

(1) Activities carried on for office purposes within the meaning of section 1(2) of the Offices Shops and Railway Premises Act 1963 shall cease to be "non-qualifying" within section 10 of this Act during any period between two successive usual quarter days falling after 5th September, 1967, which has not been preceded by a certificate under subsection (3) of this section given by the Chancellor of the Exchequer within 21 days before the first of two such quarter days.
(2) The Chancellor of the Exchequer shall lay before each House of Parliament, on or before 31st October, 1966, a statement showing the total number of non-industrial civil servants employed on 5th September, 1966, in all Government departments (other than the Ministry of Labour) in excepted employments (other than in Her Majesty's forces).
(3) After 5th September, 1967, the Chancellor of the Exchequer may (if he is able) give a certificate between 5th March, 5th June, 5th September and 5th December and the usual quarter day succeeding that relevant date certifying that the total number of non-industrial civil servants employed in all Government departments (other than the Ministry of Labour) in excepted employments (other than in Her Majesty's forces) were on the relevant date not less than 6 per cent. below the total set forth in the statement made under the preceding subsection and stating the total number so employed at that relevant date.
(4) Such certificates shall be published in the "London Gazette" within five days of being made and shall be laid before Parliament as soon as possible thereafter.—[Mr. Iain Macleod.]

Brought up, and read the First time.

Mr. Iain Macleod: I beg to move, That the Clause be read a Second time.
What you have suggested, Sir, will be convenient.
I propose to address my brief remarks to new Clause 1, with some passing references to new Clause 2. The purpose of these Clauses is to achieve a reduction in the number, and, therefore, in the cost of the Civil Service and of comparable office staffs of local authorities. Government expenditure is an extremely topical subject, particularly in the light of recent statements by the Prime Minister.
What we are saying to the Prime Minister by these two new Clauses is, "Physician heal thyself". He and other Ministers have given so much advice to employers all over the country that it would be a good thing if they now listened to some advice. They have dished out so much medicine that it would be a good idea if they swallowed some of their own, and these two new Clauses would achieve just that.
It is unlikely that people will believe that the Government are fully involved in the economic crisis, which is perhaps the worst that the country has ever faced, unless the Government and the Civil Service are prepared to show that they will share in the sacrifices and in the redeployment that others are being asked to make. We offer them the opportunity by these two Clauses.
Treasury Ministers will realise that the drafting of the Clauses is not in the least important. It is the intention that counts. Indeed, we have had to torture words to get within order, on Clause 1 in particular, but after what they have done on the Prices and Incomes Bill the Government should be the last to complain about that.
However, I shall make some points on the words that we have used. First, why 6 per cent.? Because that is the approximate cost of what the Selective Employment Tax would be in relation to the annual cost of a civil servant. Second, why do we leave out the Ministry of Labour? Because the Ministry of Labour, quite wrongly in my view, will have to carry the burden of working this absurd tax as best it can until the Treasury and the Inland Revenue take over a tax which they should never have sub-contracted in the first place.
Third, we put down that there should be a total reduction, that is to say, we do not ask for the reduction of 6 per cent. in every Department. The Government, if they wish, are free to say that the reduction cannot be made in many Departments. In that case, the House is entitled to ask for more severe treatment for the Departments which the Government regard as less valuable. The Clause would apply to about 430,000 civil servants, excluding the Post Office, which is usually excluded when calculating the non-industrial Civil Service, and 6 per cent. comes to a little over 25,000 people.
We suggest that the Government should complete this exercise by 5th September, 1967. In other words, we give them a year to make this examination, which is being carried out by firms and employers in a vastly shorter time. The Government should take on the burden of study and of proof which every company and employer is inevitably taking on.
I am a non-executive director of a firm which is both a bank and, through one of the most important hire-purchase firms in the country, a wholly-owned subsidiary, vastly interested in hire purchase. The cost of the tax to the whole of our group in the United Kingdom would be no less than £140,000. Naturally, these figures were available to us at our first board meeting after the Budget, and, in due course, we found ourselves hit in three different ways. First, we were hit through the Selective Employment Tax, then, because we are very large investors in Australia, Eire and New Zealand, and, thirdly, because of the hire-purchase restrictions.
Because the firm to which I refer, Lombard Banking Limited, is labour-intensive, the figure of £140,000 a year, an enormous sum, is also an extremely high percentage of our profits. It follows that we must spend a great deal of time considering what, if anything, we can do about this new impost of taxation.
Owing to the operation of the Guillotine, the questions, not so much of hire purchase, but of finance, banking and insurance and all the other questions that affect the City of London, for example, have not been discussed. There are many other illustrations of how iniquitous the Guillotine is. That it has proved quite impossible to discuss these matters, except in passing, shows the contempt with which the Treasury Bench persists in treating the House in this matter.
4.15 p.m.
I now return to my illustration. We studied every conceivable possibility, as every firm has done. Could we make ourselves more efficient? That is what the Government want to us to do. Would it be possible to use a smaller labour force in some of our operations, through the use of computers? I add,


in passing, that one of the absurdities of the Bill is that in many cases in manufacturing industry if one installs computers and thereby makes oneself more efficient, one may well move out of the manufacturing category and into the service category. I cannot think of anything more ludicrous.
I also wonder whether there are prestige Departments, or parts of Departments, that one was prepared to carry in ordinary years, but that one should look at again in the context of a serious economic crisis. I can give one illustration straight away to the Financial Secretary. On 7th March, 1966, a Written Question to the Chancellor of the Exchequer asked
how many public relation officers and Press officers have been appointed during the lifetime of the present Government; and what has been the cost to public funds.
The Answer from the Financial Secretary was:
50, … at an approximate cost in salaries of £75,000."—[OFFICIAL REPORT, 7th March, 1966; Vol. 725, c. 434.]
The hon. and learned Gentleman could do with a bit of redeployment there to start with, because that is one field in which he should apply the suggestions implicit in new Clauses 1 and 2. This exercise is being carried out everywhere. Why should not the biggest employer of labour in this country, the Government, do exactly the same thing?
The most horrifying statistic that has been given to me is that at the present rate at which the non-industrial Civil Service is rising, an annual rate of over 3½ per cent.—and I think from the Financial Secretary's Answer on Tuesday that it has gone even higher than this—it follows that, if all Government employment increased at this rate, the whole of the working population would be employed by the Government in less than 50 years.
There is, therefore, a clear duty on the Government to put their own house in order, to go through the Civil Service, Department by Department. I am amazed that the Financial Secretary has not accepted the Clause already, because this is the job of the Treasury.
The present Treasury is intent on wasting money, on pouring out £133 million in premiums which nobody wants, intent always on giving approval to additional numbers of civil servants. It should be

examining far more ruthlessly every request, from wherever it comes for an increase in the non-industrial Civil Service. But this is not the attitude of the Treasury at all.
Yesterday, my hon. Friend the Member for Dorset, North (Sir Richard Glyn) asked the Financial Secretary what was the increase in the number of civil servants employed full time and part time in the Treasury since October, 1964. My hon. and gallant Friend put this supplementary question:
Can the hon. and learned Gentleman say whether the Chancellor of the Exchequer has considered making a substantial reduction in the number of employees in this Department with a view to setting a good example to other employers of non-productive labour?
The answer from the Financial Secretary was:
No, Sir, particularly as the increase was mainly designed to strengthen the divisions which advise Departments on the improvement of management services and efficiency."—[OFFICIAL REPORT, 2nd August, 1966; Vol. 733, c. 241.]
We can think what we like about the end of that sentence, but what horrifies me is the way it opens—"No, Sir". He has not even considered it. That was the question—had he considered it? But, apparently, he will not consider the fact that there has been an enormous increase in the staff of his Department.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): An enormous increase?

Mr. Macleod: Far too many—67. The Chancellor will not consider the reduction of the number of staff, he has no plans, and he has no thought for it.
A few minutes ago, the Prime Minister, with his customary candour, was giving us the reasons for the establishment of the Parliamentary Commissioner. It seemed to me a most impertinent proposition to put before the House, and the reasons he gave, as everyone knows, are not the real reasons at all. The real reason is that the Government have another Permanent Secretary who is at present on leave and whom they intend to appoint as Comptroller and Auditor General; and to get that out of the way they have to deal with this——

Mr. Speaker: Order. The right hon. Gentleman is getting a little away from the new Clause.

Mr. Macleod: I respectfully agree, Mr. Speaker, and I accept your rebuke. I now pass from it, but I think that it was in order to point out that we now have suggested the creation of an additional Department, without Parliamentary authority. This shows how the trend continues.
I said that I did not want to go into great detail on figures, but I wish to refer to another Question put to the Chancellor of the Exchequer yesterday. My hon. Friend the Member for Southend, East (Sir S. McAdden) asked what had been the increase in the non-industrial Civil Service between October, 1964, and the latest available date, and what the additional cost of their salaries was. In a Written Answer from the Financial Secretary, we are told—this excludes the Post Office, which, as I said, is usual in these matters—that the increase to 1st April, 1966, was 14,900, and that in a full year their salaries would cost about £10 million.
This is what has happened to the Civil Service since October, 1964. We suggest that the Government should slim themselves of approximately that number and that number again—the figure comes to a little less than twice—and that the Exchequer would benefit to the extent of £20 million or, perhaps, a little more.
I mention new Clause 2 only in passing. Again, I am not attached to the drafting. We are here concerned with what one might call office employment. The simple question which everyone should ask himself is: look at your own town hall or county hall. Do you think that the office work done there by, say, 100 people should or could be done by 94? That is the question which we put before the House of Commons now, and I have not the slightest doubt what our answer would be. We say, therefore, that the appropriate Minister, the Secretary of State for Scotland, the Secretary of State for Wales, or the Minister of Housing and Local Government in England should not grant local authorities the refunds unless they are prepared to slim at least to this extent.
There are two things said about our Civil Service, and both are true. The first is that, in the ordinary sense of the word, they are non-productive. The

second is that they are the finest in the world. I subscribe to both those statements, particularly to the second. I have been a Minister for too long not to admire to the full the value of our Civil Service, and nothing we say on these two Clauses is, or is to be taken as being, a criticism of the calibre of our Civil Service, which is matchless throughout the world.
But it is possible to have too much, or too many, of a good thing. It is vital that every Department should during this next year prepare regular reports for Parliament putting this matter under the microscope. I should be horrified to think that the Prime Minister was putting all these restrictions upon the people if he was not prepared to take action in the sector where he and his Government are the true employers of labour.
I do not base this case in any way upon criticism of the Civil Service. We have as much regard and respect for our civil servants as right hon. and hon. Members opposite have, and in many cases even more experience of them. I do not base my case on figures. I shall not be in the least impressed if somebody can find a year during the 13 Tory years of office in which the figure went up by 0·3 per cent. more than it did in 1965, or whatever the case might be. That is not the argument at all. The argument is that the numbers in the Civil Service, partly owing to the Government's policies, have increased, are increasing, and ought to be diminished.
The Government, as the biggest employer of labour in the country, ought to take on themselves the responsibility which every other employer is taking and should account to the House for the numbers of their staff now and in the following year.

Mr. John M. Temple: I direct my attention more particularly to new Clause No. 2, which refers to the important question of the numbers of administrative staff employed by local authorities. During the war, at a moment of crisis, Sir Winston Churchill made a point of cutting down the administrative tail of the Army. He was perfectly right.
Now, in a new phase of crisis, exactly the same approach should be made to the cutting down of administrative staff in


both central and local government departments. As the Prime Minister has been compared by the President of the United States with our great war-time leader, these two new Clauses should appeal to the right hon. Gentleman himself. I am very surprised that there has been not one supporter of the Prime Minister sitting on the Government benches, apart from the Treasury Bench and the Parliamentary Private Secretary.

Mr. John Hall: My hon. Friend will have noticed also that the other half of the Labour Party is not there either.

Mr. Temple: I have a suspicion that the other part of the Labour Party may be engaged in private discussions, and that may be where the Prime Minister is as well. It is significant that when we are debating new Clause 2, which is directed specifically to employment by local authorities, neither the Minister of Housing and Local Government nor his Parliamentary Secretary is present.
The revenue expenditure on local government services in 1965–66 was £3,200 million, and that was an increase of 11½ per cent. on the previous year. It is an easy figure to say, but that was nearly 50 per cent. greater than the total of defence expenditure. No one will ever convince me that there could not be a substantial reduction in the administrative staffs if we set about it in the right way. Unfortunately, the present Government have set about it in the wrong way in the last two years.
I shall concentrate on the question of employment in local government, giving a few concrete examples of additional administrative strain put and being put upon local government, and I shall question whether the net result from some of the schemes introduced by the Government has been a real benefit to the nation when weighed against the actual cost of operation of the schemes themselves.
On 14th June last, on the Second Reading of the Local Government Bill, the Minister of Housing and Local Government said:
… we are asking them"—
that is, the local authorities—
to administer a whole lot of other improvements in rating, rate rebates, rate instalments and, as I shall show presently, domestic rerating.

Local authorities are being asked to do more changing during these two years than they have had in the whole period since the war. They have been bitterly complaining about these changes…".—[OFFICIAL REPORT, 14th June, 1966; Vol. 729, c. 1273.]
I would ask whether it was wise, in face of the admitted economic difficulties, to seek to bring about administrative chaos throughout more or less the whole of local government. Was it necessary to over-turn all the schemes which were working comparatively smoothly in a period when, admittedly, the whole administration was under strain? I do not believe that it was.
4.30 p.m.
I quote now from the Financial Times of 9th June in which the President of the Institute of Municipal Treasurers and Accountants, in referring to this, says:
New services or changes in existing services had often been introduced with little foundation in research, inadequate statistical information and few pilot schemes. This had resulted in signs of strain in the administrative machine.
The President of the Institute of Municipal Treasurers and Accountants is well qualified to give his opinion on the strain in the administrative machine.
I now turn to a few specific examples where I believe this strain is building up unnecessarily on local government. Firstly the effect of the Selective Employment Tax itself. Nobody has answered the question as to whether the tax on local government employees is to be on a pay-in pay-out basis or whether it is to be merely a paper transaction. I understand that a Working Party is sitting on this problem at the moment. From an administrative point of view, it would be far easier to have this as a purely paper transaction, with no money changing hands, as against paying the money first to the Treasury and receiving it back through the Ministry of Labour later. This is one of a hundred problems on which working parties are sitting to consider various administrative difficulties in local government at the present time. All the best brains in local government at the moment are employed on these working parties. This is a result of the administrative chaos which has been created by the present Government. Was it wise, I ask again, to get all the best brains employed on this non-productive work at a moment when the country was facing a financial crisis?
I do not know how many right hon. and hon. Gentleman looked at the City columns of The Times yesterday, but significantly there was a photograph there of the dealing office of Long, Till and Colvin. They are local government loan brokers, and I understand that they have never had a busier time than they are having at present. If local authorities have to finance this Selective Employment Tax over a period of months, I forecast that that firm and all other firms lending money to local authorities will have an even busier time in the next few months.
I turn to another matter directly affecting local authorities as a result of the operation of this Clause. It is a matter to which I have referred frequently before on the subject of the Selective Employment Tax. The Clause refers to workers in office premises, or, in other words, cleaners. The local authorities, if they employ cleaners directly, will have the Selective Employment Tax repaid, but if they employ a firm of office cleaners, which is what they are doing to a considerable extent at the present time, the firm will be treated as a service industry. If the Clause is accepted by the Government the effect will be to stop local authorities employing additional cleaners and to continue with contract cleaning services, thereby having a more efficient type of office cleaning operating in their establishments.
I refer to another administrative scheme. I am not saying that some of the schemes are necessarily bad, but I say that they add to the cost of administration in local authorities. I refer specifically to the rate rebate scheme, which I understand—I say that because even the Minister's estimates of the effects of the scheme have been proved to be off-beam—is estimated to cost some £4 million a year to local authorities. Nearly 4,000 additional administrative workers will be required to operate this scheme which is estimated to cost £29 million. I would accept that it may cost less than that because fewer people will benefit from the scheme than anticipated and that therefore the administrative cost may be under £4 million. Nevertheless, if the figure is £20 million and the cost of administration is half of the figure originally estimated, namely, £2 million, it means that the cost of administering

the scheme is some 10 per cent. of the benefit which will actually go to ratepayers. I believe, however, that the cost of administration will be nearer 20 per cent., or, in other words, that administratively it will be an extremely costly scheme.
I pass now to the operation of the Land Commission. I will not make any general reference to it because my right hon. Friend has more or less dealt with it on Clause 1. This is a central Government scheme which will mean an enormous number of extra staff. I believe the estimated number is 2,000. But, quite apart from the extra staff employed, there will be the side effect that valuers will not be available to local authorities to do the work. In a market where there is at present a scarcity of staff, the result will be to force up salary levels, and this is a direct result of Government policies.
I now make a brief reference to another piece of unnecessary administrative chaos which is being introduced, namely, the amalgamation of highway grants. It may be a good idea in the long term to treat them differently, although it has not been found necessary to do so over a period of years. But why do it at a time when the administrative machine is already under severe pressure? I remember only too well the time when a Conservative Government was criticised for moving too slowly, but I believe that in past years they were wise to do so, because they saw behind the schemes which appeared to be palatable and acceptable to everyone the wall of administrative difficulties. That is why when we were in government we moved more slowly but much more surely and steadily than the administration now on the Treasury benches.
I make reference now to another aspect of administration where the present Government thought they had all the answers. I refer to the planning field. I must admit that some of the largest files under the control of my secretary deal with planning matters. The Labour Government of 1945–50 were responsible for the Town and Country Planning Act, 1947. We amended it to a certain extent, but I always understood it was the intention of the present Administration to simplify planning procedures. We are still waiting for that to be done, but the way in


which we can cut down administration is by simplifying procedures, and I would quote here a sentence from the wise words of Mr. H. R. Page, City Treasurer of Manchester. The Financial Times of 9th June, 1966, in their report of the conference of the I.M.T.A., state:
What we want as well as a Royal Commission on Local Government Organisation is a Royal Commission on the Simplification of Local Government Administration.
That is a tip I will give gratuitously to the present Government. I believe it would be much more valuable than some of the work the Royal Commission are studying at the present time.
This administrative overlapping and unnecessary work in administration has been the subject of comment in various quarters. I happened to pick up the presidential address of the President of the Institute of Municipal Treasurers and Accountants. He referred to administrative overlapping and the work of a Miss Penelope Hall in a study of the Welfare State and the welfare society. I quote from one sentence:
… one City Council which was recommended drastically to overhaul its social services in the light of a report which disclosed that as many as eight visits were being made by different social workers to a single problem family".
As my right hon. Friend said, it would be a very strange situation in which any local authority could not cut down by six out of 100 the number of administrative staff which it employed. A great deal of overlapping is going on and it should be carefully considered.
The Government appear to be rather proud of the statement that throughout the country new town hall building has been stopped. When I heard that statement, I imagined in the mind of the Minister making it the picture of great big town halls with banks of flowers against the platforms and chandeliers hanging down and of course portraits of past mayors hanging on the walls. In fact, the town hall in local government is the chief administrative office of the authority. What the Government are doing, not selectively but wholesale, is to cut down on the building of new local government administrative offices. Unless the building of these offices is permitted in certain circumstances, we will not get the cut down of administrative staff which is both possible and vital.
In a speech at the same conference Mr. H. R. Page referred to the necessity for local government bringing in computers in order to cut down the number of administrative staff. This is the advice given to British industry by the Government, but they do not give the same advice to their own Departments or to local authorities. The administrative tail of local government should be pruned, and the administration of local affairs could still be just as effective.

4.45 p.m.

Mr. John Boyd-Carpenter (Kingston-upon-Thames): If we had television in this Chamber, as one day we may, I think that people outside would be a little surprised that in a discussion of the Selective Employment Tax there were not more hon. Members opposite present than there are officials in the Official Box. People outside would be shocked to know that so little attention was being paid by the Labour Party to this Measure. Of course, we know that hon. Members opposite are going through an internal convulsion and are having to absorb a diet composed largely of a salad made of their election addresses, but, all the same. this is an immensely important issue and there is something very significant about the lack of interest of hon. Members opposite.
After all, we are told that the whole of the Selective Employment Tax is for the purpose of securing the transfer of labour from the services into manufacturing. It has been applied outside the Government service quite ruthlessly, even to activities which earn large quantities of foreign exchange, like banking and insurance, and it is somewhat shocking that the Government should seek to exempt themselves and local government from what they are suggesting is the right process for everybody else who provides services.
As was said by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), this is not an attack on our civil servants. I have known them for a good many years and I know that not only are they the best in the world, but they do a wonderful job. The attack is on the Government for increasing the number of functions of government at this time to a point at which they feel bound to increase the staffs to discharge those


functions. If everybody else in the community who renders a service, including those whose services operate directly on our balance of payments, is to have this economic pressure on him to reduce staff, we ought to have some indication from the Government that, either as my right hon. Friend suggests, or in some other way, they are taking action to reduce their own staffs. We have had no such indication.
The other day, in reply to a Question, I was told by the Financial Secretary that not only had staffs increased compared with last year, but that there was every reason to believe that they would increase further next year. Therefore, we have no indication at all—indeed, we have a contrary indication—that the Government are trying to do themselves what they are urging other people to do. If that is their attitude, they are not likely to get a helpful response. People are not likely to respond very willingly to someone who urges them to do things which he is quite unwilling to do himself.
It is absolute nonsense to suggest that it is not possible to reduce staffs central and local. I have some experience of this. I was Financial Secretary in 1951 when my party came to power to deal with the crisis which the Labour Party had left behind, just as we shall have to do at some time in the future. One of the things we did was to cut down the functions of the Government. In a modest way I had something to do with this. They may have been very admirable, but we thought that in that economic situation they were functions which the Government should not carry out, and we reduced staff. I am, therefore, speaking about something of which I have a modest supply of practical experience, and I think that this could be done.
My right hon. Friend referred to the increase in public relations officers and quoted 50 in the central Government service at an additional cost of £75,000 a year. But that is moderate compared with what is being done in local government and in respect of the greatest of all local authorities, the Greater London Council. The House will be aware that the Greater London Council has chosen this moment to announce its intention to set up a great new information department, to tell the citizens of London

how well they are governed, at an annual cost of £600,000 extra a year.
I asked the Minister of Housing and Local Government—and I share the indignation of my hon. Friends that not one of his Parliamentary Secretaries even is here when we are dealing with new Clause 2—what he was to do about this. In the politest way possible, he indicated that it was not his business and that he was not going to do anything about it. It is shocking that, at a time when other people are being pressed to cut expenditures and staffs and when valuable services are being cut, the Greater London Council should set up a great new public relations and information branch. Of course, we know why it is doing it. It is to present a happy picture of a Labour-controlled London to delude the electors when they come to vote at the Greater London Council elections in April, but that does not excuse Ministers from dealing with it.
The Minister of Housing and Local Government says that he is not constitutionally responsible and that it is not his business. No doubt he is right, but Treasury Ministers have the ultimate sanction, for they control the general grant and it is not beyond their power to adjust grants so that when a local authority indulges in wanton extravagance plainly contrary to declared Government policy, it should have its grant denied as a lesson to it, so that if something is done, at least it is done without any element of expense to the taxpayer.
I cannot accept the attitude of the Minister of Housing and Local Government that this has nothing to do with him. Expenditure of this sort, bad enough in itself for the London ratepayers, who are already to have a further increase in their rates because of the local authority housing rent freeze, is even more of a bad example to other local authorities when the greatest of all, because it happens to be Labour-controlled and is facing an election, is allowed to get away with this.
There is an example in central Government bearing exactly upon the point that I was trying to make. The right hon. Gentleman the Minister of Land and Natural Resources—I am not quite sure if he still holds that office, because I gather that it is in a state of continuing


liquidation—told us a short time ago that the Land Commission is being set up in advance of the Bill becoming law—that seems to be general Government practice—and would be built up to a total staff, central and regional, of 2,000 people.
Many of these people, and this makes it worse, hold very scarce skills, of which we are desperately short. No one would suggest that in this crisis the Land Commission has any relevance at all. I should be out of order if I argued that I hold the view that it will make land scarcer and more expensive. Even if the views of hon. and right hon. Gentlemen opposite, that mysteriously over the years for reasons they have not disclosed, land will become cheaper and more plentiful, are right, it will not have any effect for years to come. Why not, in this crisis, put the Land Commission into cold storage? This would, incidentally, help the Leader of the House with his muddled Parliamentary programme.
The recruiting for the Land Commission should be stopped and the extra 2,000 staff could be doing something more useful. Whatever the merits of the argument, the Commission has absolutely nothing to do with our present situation, or with the situation with which this tax is supposed to deal. The Chief Secretary and the Financial Secretary, with all the apparatus of the Treasury at their disposal, can give us many more examples. The Establishments Division of the Treasury will give the Financial Secretary a great many examples of Government functions which could be dropped.
What about the special licensing areas, with the staffs at the Home Office who are needed to keep the Home Secretary in business as a brewer? Is that an essential function at present? The Financial Secretary will find in the Treasury proposals to do away with that. There are lots of other functions which he knows could be dispensed with without any harm being done to the handling of the present economic crisis and which would benefit the present situation.
We must insist that either in the way proposed by my right hon. Friend the Member for Enfield, West—and I am lost

in admiration at the ingenuity of his proposals and the way in which he deals with the narrow restrictions to which we have been subjected—or in some other way, the Government must tell the people that they intend to do for themselves what they insist on everyone else doing in this crisis. For the Government to say, "Do as I say, not as I do", would be an intolerable thing for a Government to do and would not be tolerated by the people.

Mr. Charles Fletcher-Cooke: The shade of Professor C. Northcote Parkinson broods over this debate. There are a great number of shades brooding over it from different quarters of the Chamber, though not so many in the Chamber itself. I would like to follow my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) in emphasising the importance, in this critical period, of the Government setting an example. I want to inquire into why they refuse to do so, because I am sure that they have an argument for so refusing.
I suspect that their argument is that central and local government, being nonprofit-making organisations, are somehow exempt from the rules applying to profit-making organisation. That is usually the argument given as to why the normal disciplines applying to most of our activities do not apply to them. I want to suggest that that is a reason why greater discipline should apply to them rather than to profit-making organisations. A profit-making or a non-loss-making organisation is obliged to comb and cull its labour forces, particularly when it has an impost like the Selective Employment Tax put upon it. Then it has to comb and cull even more rigidly.
There is an internal discipline which means that profit-making or non-loss-making organisations are subjected to something devastating, whereas central and even more so, local government, which are not directly concerned about making a profit or avoiding a loss, are not subjected to the same influences. It is necessary to have additional disciplines such as those suggested in new Clauses 1 and 2, or perhaps other disciplines which might be suggested by the guardians of the public purse, namely, the Treasury Ministers.
By tradition, they are supposed to suggest, propose and publicise disclipines for


controlling the expenditure of the public purse and to invite other Departments to agree. The central Government are less to blame in this matter than are the local authorities. It is all the more extraordinary that we have had no representative from the Ministry of Housing and Local Government on the Government Front Bench throughout this debate. That seems to be the most astonishing contempt of what is a matter upon which not only the whole country is looking to us for action, but the whole world—the cutting down of public expenditure.
It is common knowledge that not only in London, but throughout the world, people regard the reduction in Government expenditure as a token of our determination to overcome our economic difficulties. Some people think that this should be done by means of cuts in defence or overseas expenditure, and others, such as myself, think it more important to do so internally. Whichever way it is done, it is a kind of litmus paper showing the determination of the Government to see this through. Rightly of wrongly, the Government have determined not to touch any of the Welfare State expenditure.
One would think that they would be the more determined to reduce internal Government expenditure on the employment of additional public servants, particularly in local government, where the Treasury Ministers, the watchdogs of the public purse, have slightly less control. One would have thought that the Treasury Ministers would have been insistent that the Minister of Local Government or one of his deputies, would have been here.

Mr. MacDermot: We have made great attempts throughout the Bill to secure the attendance of Ministers concerned with aspects of the debates. We Treasury Ministers have assumed responsibility for this. It was done in this case and my hon. Friend the Parliamentary Secretary wanted to attend, and I hope that he will be able to get here. Hon. Members will appreciate that it was not until the selection took place at 1 o'clock today that we knew that this debate would be called. Ministers do have appointments, and hon. Members will understand that these sometimes prevent them being here at a particular hour. But, certainly, it is the intention of the Parliamentary Secretary to be here.

5.0 p.m.

Mr. Fletcher-Cooke: I am grateful for that explanation.

Mr. Nicholas Ridley: The Parliamentary Secretary was here throughout Question Time. It almost looks as if he has avoided the debate on purpose.

Mr. Fletcher-Cooke: As I say, I am grateful for the Financial Secretary's intervention. It shows that at least he takes the matter seriously.

Mr. Raymond Gower: While the Financial Secretary's answer may, to some extent, explain the absence of a representative from that Department, it is significant, is it not, that the Secretary of State for Scotland and the Secretary of State for Wales, who have similar functions in those parts of the United Kingdom, are both unrepresented this afternoon?

Mr. Fletcher-Cooke: It may well be that they are all in the same Committee together. Knowing how matters come up at the last minute, I do not wish to blame them personally.
But concentrating, as we should, after the speech of my hon. Friend for the City of Chester (Mr. Temple), on the local government aspect—it is in this respect more than any other that the pruning should be done—it is a pity that none of the Ministers responsible for local government matters has been able to be present. I am glad that the Parliamentary Secretary to the Ministry of Housing and Local Government has just come in. I am sure that his presence is due to the "early warning system" of the Financial Secretary.
I conclude on this note. It is the note struck by Professor C. Northcote Parkinson. There is no doubt that all the people engaged in central and local government administration are very busy moving paper around. The more people employed, the more paper there is. The Treasury should not take as an excuse the fact that eminent servants, in central and local govenment, are busy as a reason for not reducing their numbers. One of the great laws of Professor Parkinson is that work expands according to the time and people available. There is no doubt that work breeds work and paper breeds paper. The Government must, therefore,


resist as strongly as they can the prayers and imprecations of their civil servants who will tell them that all the people in their Departments are thoroughly busy and overworked, as no doubt they are. But this is not a sign that there cannot be, with great advantage to those remaining to do the work, a serious cut made in the numbers employed.
The suggestion of my hon. Friend the Member for the City of Chester, made from war-time experience, should be adopted and the tail should be cut, whether by the 6 per cent. brutal overall figure suggested by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) or by some other figure. As my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, it is no good saying to people, "You should do this, but we shall not do it because we are beautiful and good and non-profit-making and the rules do not apply to us". Even if that were true philosophically, it would be useless as propaganda. People would not believe it, even if it were true, which it is not. We have had too many examples of this.
People are told that they must keep prices frozen until 1st January. But the Post Office is to increase its charges in October. There are no doubt good economic reasons why they should be increased, but people do not understand them. Why should the Post Office increase its charges while everybody else is not allowed to do so? Exactly the same applies to culling staff from civil services and administration. If other people are expected to cull their staffs, they must do it and many of them are engaged directly in the export trade and in industries which affect the balance of payments. If the Government, and particularly local government, do not do it they will get no response and they will not deserve a response.

Captain Walter Elliot: To me, and to the country in general, the prevailing characteristics of the last few days, weeks and even months have been the feverish activity in high Government circles. I suppose that an outside observer might be forgiven for thinking that this was the instant swinging into operation of all those Socialist plans about which we heard so much at

General Elections. But the effect has been to produce a general deadening in the tempo of national life, a slowing down in practically every field of activity.
That is the object of these feverish activities. There has been a standstill in many activities—for example, in the arbitration courts and wage councils. We remember the expression which the Prime Minister used when in opposition. When a Conservative Government stepped in on one occasion, "You may disagree with the referee, but you do not shoot him". The Government have shot all the referees; they will be out of a job.
The Services are to be cut back. We are not to have a carrier. All this cutting back and dampening down must lead to a reduction in the need for administrative services. How can the Government call for economies from private industry if they do not set an example? This is one of the causes of the failure of the Government's incomes policy. While calling for economies from private industry, they do not adhere to the principle themselves. In the area of employment in which the Government have direct control, the country is looking for an example.
Like other hon. Members, I have served in Government offices for three or four years. When anything is cut, or duties are changed, or there is a standstill, it is easy fully to employ everybody in the office. The old dockets are dug out and passed round and old plans which have been pigeon-holed for years are circulated and everybody is fully employed. When the question is put, as one of my hon. and gallant Friends put it yesterday to the Treasury, it is no good the Minister answering, "No Sir; I will not look into the question of reductions".
A determined and definite effort will have to be made if reductions are to be achieved, for unless it is made there will be plenty of work for everyone to do in those offices. They will be fully employed on entirely unproductive work. In the face of the present dreadful crisis, the country is looking to the Government to set an example. I would be very interested to hear what they intend to do.

Sir Douglas Glover: I rise to support my right hon. and hon. Friends


on new Clauses 1 and 2. What the country is suffering from more than anything else is over-government. In my view, we were suffering from it when the present Government came into power. The Civil Service has gone up by 15,000 people in the last 15 months, and there is every indication that, in the next 15 months, it will go up by at least the same figure.

Mr. Gower: And more.

Sir D. Glover: I think that my hon. Friend the Member for Barry (Mr. Gower) is right. The figure will probably be more.
In this Clause, we are asking that that figure should be reduced by 6 per cent., and it would be achieved if all the increases brought about by the present Administration were cancelled out, although that would still leave us with a very heavy administrative burden.
No general ever got very much respect from his troops if he led them from behind. No general ever got any respect from his troops if he avoided all the sacrifices. What the Government are doing by their credit squeeze is saying that everyone else in the country must suffer except their own machine. What an example that is to the world and to the nation. If the Government dropped the steel nationalisation Bill and accepted these two Clauses, there would be no more need to strengthen the £, because they would show more clearly than any other action that the Government were determined on a course of economy and were reducing the burden of government. However, that is too simple for right hon. Gentlemen opposite.
I may say to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) that I think the reason why there are so few hon. Members opposite at the moment is that the remainder are asking the Prime Minister to explain why he was not in the Division Lobby last night. But I must not proceed with that, otherwise I shall be out of order.
I now want to give a few practical demonstrations of how the Civil Service could be reduced. When I was in the Army for six years, I became Civil Service minded. When I came out of the Army, my business ran rather on Civil Service lines until trade got so bad under

the Government of the right hon. Gentlemen opposite that we had to take economy measures. I discovered, by reverting to the free enterprise system of making quite certain that we were efficient and that no one had a prestige secretary, that we had a turnover twice as big with half the staff, because we made ourselves more efficient.
In the Public Accounts Committee last year, I asked one of the accounting officers a question about his organisation and methods division, which consisted of 177 people, and I inquired by how many people they had reduced the staff of the Department. The reply came, "Oh, no. The Department has gone up." My argument was, what are the organisation and methods people doing? I was not dealing with one of the great spending Departments. There was a Department doing the same job as before, and there were 177 people employed to go round and make certain that it was efficient. All that happened was that the number of people went up. I should have thought that the 177 people in the organisation and methods division would have done much better if they were out of a job in that division, because it is quite obvious that if an organisation and methods division does not reduce the staff by its own strength, it is increasing the staff for no purpose. That is a point in the present crisis which I think right hon. Gentlemen opposite could look into right the way through the Government machine.
5.15 p.m.
It is true in human life, particularly in a non-profit-making organisation, that work is created to fill the hands of its staff. If the staff is reduced, the work load is reduced. There is an enormous amount of to-ing and fro-ing. I have a tremendous admiration for the Civil Service, but, because it is a non-profit-making organisation, it has to have channels of promotion similar to those in the Services. It is a good thing if the head of a department can get ten more people on his staff, because he becomes upgraded. That is the whole system.
I remember what happened when we started demobilising our Forces at the end of the war. People were fighting like Kilkenny cats to prevent men being demobilised. A man who was acting wing commander knew that if a few more


men were demobilised he would soon come down to squadron leader. The same thing happened in the Army, because the size of one's department justified one's rank and pay.
I am not criticising the system. I do not think that there is any other way in which to run it, because it is a nonprofit-making organisation. However, in a time of crisis, that which we ask for under the new Clause could be achieved. Every department has an establishment, but when people go on holiday during the summer, its work does not fall behind. It is still done with 10 per cent. of the staff away during the summer months. If 6 per cent. were away permanently, the work would still be done, because efficiency could improve. People would begin to cut corners and ask if certain routine jobs were necessary.
My hon. Friend the Member for the City of Chester (Mr. Temple) quoted an instance in local government where eight people were visiting one family. If, as a result of new Clause 2, pressure were brought to bear on local government, someone in that particular local government office would ask, "How do we cut down?". The service would be streamlined, and one person would go where eight people go today. However, it will not be done unless there is pressure.
I agree with my hon. Friend that some of the services may be very desirable. I believe that, as a result of the incompetence of the party opposite—for the moment, I will leave out what is the reason—we are going through the biggest deflationary effort that any Government have attempted in the country since the 1930s. I fear very much what the situation will be in 12 months' time. It is completely wrong and will not get the effort from the remainder of the economy if the central and local government machines are isolated from what has been forced upon the public at large.
I ask right hon. Gentlemen opposite seriously to think about these two Clauses. If they were put into operation, they might not succeed 100 per cent., but if they succeeded 50 per cent. it would show that the Government were determined to set an example. It would also be introducing a degree of stringency in

the Civil Service and, therefore, increasing its efficiency. As a result, I believe that it would help to overcome the problem with which we are all grappling at the present time.

Mr. John Hynd: I do not think that anything could better illustrate the synthetic nature of the campaign which the Opposition have been conducting about the Guillotine, and the way in which the Bill has been dealt with, than the speeches which we have heard on these new Clauses and Amendments. I am sure that not one right hon. or hon. Gentleman believes what he is saying.

Mr. Gower: The hon. Gentleman is wrong.

Mr. Hynd: I am not. During the last several days we have been arguing about the importance of having time to discuss the important aspects of the Bill. On the Notice Paper there are a number of important matters worthy of discussion and although time is limited, we are spending a considerable part of that time, at the instance of the Opposition, on a completely phoney proposition, as they know it must be. They are suggesting that there should be an automatic cut of 6 per cent. in Government servants and local authority employees, without stating the basis on which this could be made, or the basis on which one could calculate the 6 per cent.
The hon. Member for Ormskirk (Sir D. Glover) said that during the next 15 months the number of civil servants would probably increase by about 15,000 and when one of his hon. Friends suggested that the increase would be even larger, he agreed.

Mr. Cranley Onslow: Mr. Cranley Onslow (Woking) rose——

Mr. Hynd: I intend to make only a short speech, and then the hon. Gentleman can make his contribution to the debate.

Sir D. Glover: The hon. Gentleman has not been here to listen to the debate.

Mr. Hynd: I heard the speech of the hon. Member for Ormskirk, and that of the hon. and gallant Member for Carshalton (Captain W. Elliot).

Sir D. Glover: As the hon. Gentleman has come in halfway through the debate,


and therefore has heard only half the argument, how can he give a sensible reply?

Mr. Hynd: I am sorry that the hon. Gentleman considers that his argument is only half an argument. I am replying to the two speeches which superseded mine, and I was encouraged to intervene precisely because the hon. Member for Ormskirk said that there were only a few hon. Members on this side of the House, and none of them was taking part in the debate. I therefore felt that, although I had heard only the hon. Gentleman's half argument, and the speech of his hon. and gallant Friend, I was entitled to make these comments.

Mr. Iain Macleod: How can the hon. Gentleman put forward this argument? The speech which introduced these two important Clauses was made from this Box. The hon. Gentleman did not come to listen to it. That speech set out clearly the basis for the 6 per cent. reduction. How can the hon. Gentleman now argue that no case has been put forward, when he did not even bother to come into the House to hear the speech which set it out?

Mr. Hynd: I thank the right hon. Gentleman for his rather vindictive comments, but, as he knows, there are many activities which claim the attention of hon. Members. I am dealing with my position. I was in at the beginning of the debate. I had to go out because of another important group meeting which I was asked to attend. I am glad to have confirmation from the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). I returned to the Chamber as soon as I could, and I have heard two speeches in support of the Opposition's case.
It may be that the right hon. Gentleman gave some basis for his 6 per cent. calculations. It may be that he put forward reasoned arguments why there should be an average cut of 6 per cent. I am dealing with the speeches which I heard, and I am saying that they made no contribution to any consideration of why there should be an overall cut in the Civil Service, or why it should be 6 per cent. It was certainly suggested that the number of civil servants would rise by about 15,000 during the next 15 months,

and possibly by even more. That may be right or wrong, but the hon. Gentleman might have explained why he assessed the figure at 15,000, or possibly more.

Mr. Onslow: Mr. Onslow rose——

Mr. Hynd: I am sorry but I cannot give way.
I am puzzled to know why hon. Gentlemen have spent so much time on this kind of thing, when they have been proclaiming so loudly that there are so many important things to discuss but they are not permitted to discuss them because of the time schedule.
The hon. Member for Ormskirk referred to the Public Accounts Committee. I gather that he was a Member of it, and that he asked certain questions. I believe that one of the duties of the Public Accounts Committee is to investigate any Government expenditure which it considers to be excessive, and to report to the House. Has that Committee submitted any such report? There is also the Estimates Committee, and there is the Auditor-General. We have a number of responsible bodies which keep an eye on the size of the Civil Service, and on the necessity for the various establishments. Do we not discuss the Estimates every year? Are we not in a position to bring forward proposals when we feel that certain Departments are overstaffed? Of course we are, and the hon. Gentleman knows it.
Whatever arguments hon. Gentlemen opposit may try to adduce, the new Clauses are not practical propositions. They have not addressed themselves to the problem at all. Their purpose is either frivolous, or vindictive, and in these circumstances I hope that we will be able to get on to some of the more important points which I should like to discuss.

Mr. Ridley: On the pretext of criticising what my right hon. and hon. Friends have said, the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) has only succeeded in wasting the time of the Committee in a frivolous and unnecessary way. Several of my hon. Friends wish to contribute to this grossly truncated debate, and the hon. Gentleman's speech has not contributed to a problem which is concerning the nation,


namely, this massive growth in bureaucracy at a time when the rest of us are being asked to cut back.
I agree with what has been said from this side of the House, but I should like to make a few remarks about Amendments Nos. 114 and 115 which I feel raise an important principle. Clause 4 was not discussed in Committee, again due to the fall of the Guillotine, and it seems wrong that this House should allow to go through a Clause which, in subsection (2), says:
The appropriate Minister may make to any employer … such payments … as he may … think fit …
That gives any Minister carte blanche to decide when, and how, and to whom, and by how much, he will reimburse the tax paid. It is a thoroughly wrong principle that Ministers should take unto themselves power of this sort.
The fact that the Clause could not be discussed, or be explained, in Committee shows how unfair and harsh the Guillotine is, and how it has prevented this House from doing its work on the Bill. This is something which should be objected to, and should be pointed out.
The Government may say that it does not matter if the Minister gives back a bit too much, or not enough, to local authorities because they are public bodies, and it is merely taking money out of one pocket and putting it into another. But I wonder whether this is true, because there are such things as hospitals, schools, educational establishments under local authorities, and so on, which could be affected by this Clause. Doctors, dentists and many other people will get their tax reimbursed under this Clause, and therefore the idea that this does not really matter seems to me to be a sloppy and wrong one.
Dentists have been told that they will be reimbursed on the basis of the average number of assistants at present employed by dentists, which is 1·9. I have been given the details of one dentist who employs five assistants. He will have to pay five 25 bobs a week, but he will be reimbursed on the basis of 1·9 assistants. This is a most unfair way to approach this problem, and here we see immediately that it is not only the local authorities who will be receiving payments under this Clause, but private citizens whose

incomes are by no means large enough to stand an injustice of this sort. The greater the number of assistants that dentists have, the more efficient they are and the more people are treated without using the highly trained and scarce dentists, of which the country could well have more to meet its dental problems.
The effect of the proposal will be to subsidise the dentist who works inefficiently without as many assistants as he would be able to use and to penalise the man who gets through the largest number of cases efficiently out of his own pocket. This is the result of a Clause which was never discussed at all in Committee. The Treasury ought to pay back even to local authorities and bodies dependent upon them the exact amount of tax which they have paid and not some approximate amount which may, in their minds, be equally good. Why take a power to make what payments the Government think fit? Why have they not taken the power to pay back exactly the amount of tax and why the word "may" instead of "shall"?
Surely the right hon. Gentleman must pay back this tax, not "may" pay it back according to a whim of his imagination and depending on how he feels in the morning and on whether he has been up in the House all night. Surely it it should be mandatory upon him to pay back exactly the amount of tax to each employer, whether a dentist, a county council, a water board or a special housing association. I should be grateful if this could be cleared up.
The fact that I have spoken to the two Amendments does not mean that I do not entirely support the case which my hon. Friends have made on new Clauses 1 and 2, but I will not weary the House by going over that ground again.

Mr. Onslow: I welcome the opportunity to debate the proposition mentioned by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), that the size of the Civil Service has increased, is increasing, and ought to be diminished. I realise that the requirements of draftsmanship may have forced my right hon. Friend to insert a once-for-all cut of 6 per cent., which could be attacked as not the best way of achieving this. As a former Civil Servant, I made my own contribution to diminishing the size of the Civil Service some years ago—and


I should like to make it plain that whatever I say in criticising the Civil Service is not a criticism of civil servants themselves but of the system and the way in which the machine is being used and abused by this Administration.
I must, however, say, with due deference to my right hon. Friend, that I believe that he has seriously understated the present situation. I put down a Written Question to the Chancellor on 8th March this year, before the election, and his reply is reported in columns 458 and 459 of HANSARD. That Answer shows that, between October, 1964, and 1st January, 1966, the number of non-industrial Civil Servants increased by 10,700 and the total extra annual cost, including pension commitments and accommodation, amounted to some £11 million.
When that Answer is compared with the one given to my hon. Friend the Member for Southend, East (Sir S. McAdden) in a Question asked on 2nd August and reported in column 66, two striking facts at once emerge. The first is that, on the basis of the Answer which I was given to my earlier question, it is clear that the total extra annual cost of the additional 14,900 civil servants whom we now learn were engaged between October, 1964, and 1st April, 1966, must be over £16 million.
I therefore suggest that my right hon. Friend has considerably underestimated the costs which that Government have placed on us in this respect. The second striking fact which emerges from a comparison of those two Questions is that the rate of growth of the Civil Service, on the basis of its performance between January and April, 1966, is now 1,200 a month. This is an annual rate of just under 14,500 a year. I put that point to the hon. Member for Sheffield, Attercliffe (Mr. John Hynd), whom I am glad to see still here. It is one reason why I said that it is probable that the increase would be even more than 15,000.
If the hon. Member wants more evidence, I refer him to a Question reported in the House of Lords HANSARD of 3rd August, yesterday, when the Minister without Portfolio, after being asked how many civil servants were employed at 23rd October, 1964, how many were employed today and how

many were expected to be employed in 12 months time, said:
The original Estimate for 1966–67 provided for an increase of just over 13,000 staff during the following twelve months. New policies which could not be reflected in those Estimates may bring this figure up to 17,000."—[OFFICIAL REPORT, House of Lords, 3rd August. 1966; Vol. 276, c. 1301.]
I hope that he will withdraw the insinuations which he was making——

Mr. John Hynd: There is nothing to withdraw. I was asking only on what basis the calculation of 15,000 or more was made. I am grateful to the hon. Gentleman for giving me the information.

Mr. Onslow: I am grateful that the hon. Gentleman is grateful. Perhaps he could have saved some time if he had let me intervene when I tried to do so in his speech.
The increase in the Civil Service with which we are confronted, and which is undeniable, is also going on on a basis which is not, apparently, within the capacities of prediction of the Government. I found this in a number of cases when I have first asked Questions of various Ministers about the increases in staff which they anticipated over a period as short as six months ahead, and at the end of that six months I have asked another Question to find what the actual increase had been. In many cases, I would say in almost all, I found the actual increase varied wildly from the predicted increase—sometimes it was as much as 50 per cent. out. This is a non-planning situation, which is clearly very serious.
The growth of that Civil Service also, of course, has its effect on its demand for accommodation. I put some Questions recently to the Minister of Public Building and Works about office space occupied by Government Departments. I was given a great many statistics, of which I will weary the House only with two. In December, 1964, the total square footage of office space occupied by Government Departments was 39,320,000. In December, 1965, it was 41,440,000. That is an increase of about 5 per cent. in one year, and this before the real increase in the Civil Service has started to bite—and all this in the context of a Civil Service which is 3 per cent. under establishment, as the Chancellor told me when


I asked him a Question on the subject the other day.
Why does all this matter? Not just because of the impact of Parkinson's Laws, although Members of the Treasury Bench may recall, perhaps, the most significant and penetrating of all those laws, that men who are not allowed to take important decisions come to regard as important the decisions they are allowed to take. That law applies, I think, to the whole Cabinet and to the Prime Minister, too.
Apart from Parkinson, whom I commend as bedside reading to the Financial Secretary and the Chief Secretary, I believe that the increase in the Civil Service is dangerous for a number of reasons. It soaks up talent. In our society, there is not an inexhaustible pool of talent and ability, although we sometimes delude ourselves into believing that there is. The Land Commission has been cited as a case in point. The 1968 rating revaluation has had to be postponed because the talents of valuers are to be absorbed into the Land Commission. I expect the ratepayers will have something to say about that when the time comes.
Increases in the Civil Service lead to delay in decision taking and this leads to inefficiency. Bureaucracy and Socialism are to my mind inseparable, and they dance hand in hand with national inefficiency. The situation to which the Inland Revenue has been reduced in its attempts to apply the fiscal measures introduced by the Government last year and this year is an illustration which speaks for itself. The growth of the Civil Service also diminishes national freedom, limits individual enterprise by centralising power and taking decisions out of the hands of individuals. It therefore limits active individual participation in society and relegates men and women to a passive rôle, wherein public faith in the democratic process is progressively destroyed.
We are moving towards a new sort of two-nation situation, the division being between those who are employed in permanent and pensionable Government jobs and those who are not. This reinforces a tendency towards a form of anarchy, a contempt for authority, and of course it also acts as a stimulus to the

brain drain, which seems now to be proceeding at a most dangerous level. All of these are social costs which must be added to the purely monetary costs which I have outlined earlier.
I think that I can forecast the Government's justification for their attitude. Apart from saying that the new Clause as drafted would scarcely be capable of implementation—which is the standard Government reply to most new Clauses—they will probably say that the increases which they have created are justified, being necessary to implement the legislative programme on which they think they are embarked. We have already been told that there have been no cuts in establishments or staff in the Civil Service, despite the financial crisis. Following the Prime Minister's statement on 20th July I asked a number of Questions and I was told that the five main employing Ministries had made no cuts in staff. "We need these people to carry out our policies" is what those Ministries say. The Government should think about this matter carefully because now that people are seeing what these policies mean, in terms of money, people and the total social costs, they are turning against these policies because they see that we cannot afford them. The destruction of what the Government think they will be able to do is very closely bound up with this subject—the increase which is proceeding in the Civil Service.
I might be thought to be offering to the Government the solution to their difficulties—in suggesting that if they accept the new Clause they might preserve themselves from defeat at the next General Election. They might do that, although I doubt it. But if the new Clause, or the intent behind it, is not accepted and implemented, we will find that not only our hopes of progress and our freedom as individuals will be destroyed but that the Civil Service as we have known it and have been proud of it will also be destroyed.

5.45 p.m.

Mr. Gower: The figures quoted by my hon. Friend the Member for Woking (Mr. Onslow) suggest that the Government's failure to increase production is not entirely complete. Indeed, in at least one sphere production seems to be booming. It is, therefore, extraordinarily difficult to


believe that the Government will entirely reject the principle and basic objectives of the new Clause.
My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) clearly described the nature of S.E.T. on commercial firms and businesses. I was glad that he cited the example of a company with which he is intimately associated. In that way the House was able to have a better picture of what this new taxation will mean. My right hon. Friend also described the careful consideration which he and his colleagues on the board of that company had had to give to this problem.
Recently a small employer in my constituency consulted me on an aspect of taxation arising from last year's Finance Act. It would be out of order for me to discuss that legislation. While advising my constituent I could not help contrasting the plight and difficulties of a relatively small employer and trader with the position of the great Departments of State in matters of this sort. Is it fair that a relatively small trader should be harassed and obliged to consider with great care how he can meet the requirements of this legislation while, at the same time, Departments of State and large local authorises should be absolved from such matters? It is not fair. So far this burden of scrutiny has not been placed on Government Departments and local authorities. As my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) explained, there is no natural tendency for the staffs of Government Departments and local authorities to either remain at their present level or to decline in number. Indeed, the evidence is that their numbers are increasing.
It is significant that this tendency has made it necessary for some of the more enlightened local authorities to call for outside expert opinion in trying to achieve greater efficiency in administration. However, there is no Government sanction at present on local authorities comparable with the sanctions being imposed by S.E.T. on private commercial organisations. Without financial sanctions, the tendency of some State bodies to go in for empire building cannot be denied. It would be disgraceful if, having enjoined on private commercial firms greater efficiency and the more efficient use of manpower, Government Departments and

local authorities were completely exempted from doing anything likewise.
When the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) considers the problem in this light he may conclude that we are discussing a part of the Bill which is as important as some other parts of it—particularly those parts which we were not given sufficient time to discuss in detail. This is an important matter which does not arise solely out of S.E.T. However, S.E.T. will make the position worse and it is incumbent on the Government, in the interests of fairness, to ensure comparable efficiency in the State sector by accepting the new Clause. These Clauses in their present form may not be perfect, but I hope that the Minister will not on that account refuse to concede the need in the service sector for similar sanctions to those already imposed on private firms, as that would be most unfair.

Mr. Tim Fortescue: I support the new Clause wholeheartedly, but my main object now is to correct a misunderstanding that my hon. Friend the Member for Ormskirk (Sir D. Glover) may have caused in his reference to the Organisation and Methods Division of the Treasury. It is within my direct and personal knowledge that this division is magnificent; that it is one of the best, if not the best, efficiency organisation we have, and I am very happy to be able to pay it this tribute.
The misunderstanding probably arose from the fact that the 177 people who have been mentioned are responsible for organisation and methods throughout the whole Civil Service and not just in the Treasury, and that figure is by no means out of line. The impression that these people are not doing a good job is, perhaps, fostered by the fact that they are powerless to judge or improve any question of policy. Their job is simply to see that the work that is being done is being done to the best advantage by the people there. If the Government, or if this House, choose to instruct the Civil Service to do new things, the Organisation and Methods Division has neither the right nor the power to say that those things should not be done. It can only try to see that they are done as efficiently as possible.
Some years ago, when I was working with one of the specialised agencies of the


United Nations in another country, we were lucky enough to get the Organisation and Methods Division of the Treasury to look at what we were doing. I suppose that because they were away from the eagle eye of the Chief Secretary—or whoever then held the equivalent post—the members of the division were able to play a much bigger part in what should be done rather than in just what was being done, and I should like to give a brief example.
We were housed in a very large building, with many floors. As it was the United Nations building, it contained a very large assortment of expensive furniture, typewriters, and so on. Everything was done very lavishly. To keep track of furniture and equipment there were on watch on each floor two gentlemen known as inventory officers. Every time a desk, a chair or a typewriter was moved from one office to another, the move had to be reported to these officers, who then altered their lists. These lists were kept up to date and were audited each year.
We wanted to reduce staff, so we thought that this job could be done by one inventory officer on each floor. There was, of course, a chief inventory officer and an assistant chief inventory officer, but they were on the ground floor. When the people in the Organisation and Methods Division looked into this difficult and technical subject, they asked, "Why do you have an inventory at all?" We said, "It is to keep track of all the valuable furniture and equipment in the building." They told us, "That is foolishness. No one will carry out a desk on his shoulder. You are spending more money on keeping track of all this furniture than you could possibly lose if it were mislaid. Abolish your inventory and carry on without one." I recommend the Treasury Bench to see which Departments are operating an elaborate inventory system and abolish it.

Mr. Maurice Macmillan: Despite the strictures of the hon. Member for Sheffield, Attercliffe (Mr. John Hynd), I do not think that I need repeat my right hon. Friend's arguments, but I should like to take up one point made by my hon. Friend the Member for the City of Chester (Mr. Temple) by asking the Financial Secretary how the proposed

adjustment in the Selective Payment Tax would be paid to local authorities if they had to borrow. Perhaps he will tell the House whether in the mind of the Treasury there has been any question of the ratepayers' concern at the possibility of extra borrowing, or, indeed, of Treasury control and influence being used in connection with this forced loan if this tax is paid. It seems arguable that there is an element of sanction here in regard to control of the Parkinsonian expansion of local authorities which may or may not be in the Government's mind.
My hon. Friend the Member for Ormskirk (Sir D. Glover) referred to the size of Departments relative to their work. I hope that I will not be thought frivolous if I ask what the Admiralty does in all those buildings when it has so few ships. In some cases, the vast space required seems to be in inverse proportion to the size and actual responsibilities of the Department. I do not make this point as any criticism of the Civil Service, but merely in order to point out that these people are being asked by the present Government—and, I suppose, to some extent by past Governments—to undertake a task for which they are not trained, organised or equipped.
My hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) pointed out how much more freely the members of the Organisation and Methods Division of the Treasury were able to operate outside this country. I would remind the Government that changes in administration made, for example, by Marks and Spencers, does not imply criticism of the way in which their checks and controls were formerly operated, the fact being that the board decided as a board that it was not worth operating them at all. In these difficult times, we must ask the Government to look at some of these ideas if they are asking private employers to reduce their service and administrative staff to this extent.
There is no doubt that the system and responsibilities imposed on the Government, in some cases by the demands of Parliament, enormously increases the volume of paperwork, and, above all, the passing upwards of responsibility and seems to demand greater numbers of staff than are necessary in a commercial organisation. Where possible, the Government should apply more general


managerial standards in regard to structure and responsibility than they now have. This applies more to local authorities where, in some cases, far greater discretion could be given to individual officers, but it also applies to the national Civil Service, in which a greater degree of delegation could well achieve a greater degree of efficiency.
My main point is the link that exists between this new Clause and the Prime Minister's announcement this afternoon—the link between our wish to reduce the numbers employed in the non-industrial Civil Service and the need for an ombudsman or Parliamentary Commissioner. They both arise from the policies of all modern Governments, to some extent, but of this one in particular, and the impact that the governmental machine has on each one of our people.
6.0 p.m.
The classical progress of civilisation has been from status to contract. It has taken a Socialist Government to reverse this process and move us steadily backwards to a position where relations between citizens are governed not by contract but by status. Almost every step this Government have taken, almost every measure put before us, reduces the field in which individual citizens in commerce, business, private life and exporting can operate freely within the law knowing the conditions they will find and adds to the extent to which they have to get permission from some Government official or other.
I need give only one example, the replacement of investment allowances by investment grants allowances which used to be paid through the fiscal system to a producer who could know beforehand whether his line of action would qualify. Now, however brilliant he is, he has to go to an individual official for a decision. The same applies to the whole question of allowances for research and development and to the operation of this Selective Employment Tax.
In every way now the liberty and freedom of action of the individual is becoming more dependent on an official decision. That is one of the reasons why this is not just a debate about the efficiency of the Government machine and the Government setting a good example in the times of difficulty by

reducing their own staff as well as asking others to do the same. These are very important matters, but this is a debate about something more. It is what my right hon. Friend the Leader of the Opposition called the other day "the great divide". On which side are we?
In this crisis when the Government are asking the people, businesses, employers and employed to make sacrifices, are they prepared to continue, as the Government have shown in the last few days, to treat Parliament with contempt, reducing the area in which the individual can act freely and tending to reduce the respect and concern with which Parliament is viewed in the country as a whole?
That is one side of the case which the Government have to answer this afternoon. The other is how they expect people to act, even those who are trying their best, in the national interest when every time they say, "Don't do as I do, do as I say"?

Mr. John Nott: If those on the Government Front Bench were to look around the empty benches in this House, they would see ample evidence of the high productivity of our legislators.

Mr. MacDermot: Was the hon. Member present earlier?

Mr. Nott: No—the Financial Secretary is absolutely right. I make no claims, such as hon. Members opposite make, to having been here all the time, but I did hear the opening speech of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). I make no claims such as are made by hon. Members opposite for having been here throughout the debate.
The productivity of our legislators is perfectly evident in this House today. There are 20 or 24 of us here examining this important new Clause. If we look around we can see almost as many members of the Civil Service also present in the precincts of this Chamber. I believe that without very much difficulty a reduction in the number of civil servants in the country would raise productivity quite considerably. It is only necessary to go for luncheon at the Reform Club or the Travellers' Club to find those clubs simply stuffed with civil servants. Those places are sanctuaries beyond the


Organisation and Methods Division of the Treasury. I am sure that many are salted away there beyond the grasp of the Organisation and Methods Division.
Of course the Civil Service could bear this cut. As many of us know, a cut in numbers in large organisations usually raises the productivity of those who work in those organisations. I remember so well when McKinsey carried out the investigation into Shell some years ago. I cannot remember the exact percentage of the cut, but I think it was about 10 per cent. All the executives of Shell threw up their hands in horror at the idea that that great company should have its executives cut by that amount. Looking back to that occasion, I think most people in Shell would now agree that it was an event which raised the productivity of that company by a great amount.
I would be much happier if the Government brought in an outside body such as the McKinsey organisation to examine the Civil Service than if it were done solely by the Organisation and Methods Division, because I would have faith that a completely outside body would examine the ways of the Civil Service and make absolutely certain that they are as productive as they could be. Surely efficiency, like charity, must begin at home. It is no good enough for this House to preach to the country about reform and modernisation if we are not able to reform the procedures of this House ourselves. Likewise, surely it must be right if the Government wish to reduce the numbers of those employed in the administrative process in the country generally, if they wish to reduce the numbers in service trades, to show an example to the country by starting with a cut in the Civil Service and local government. There is no doubt whatever that this could be done. I believe that by such an example the country would derive great benefit.
I hope that in his reply the Financial Secretary will at least show that he has some understanding of the need for such a cut even if he is unprepared to agree to the exact wording of this proposed new Clause.

Mr. Patrick Jenkin: I wish to add a few words to the protests which my hon. and right

hon. Friends have made about the pattern of this legislation and the fact that their is nothing in it whatever to make it apply to the public service. I can appreciate the difficulties which any organisation has if it is faced with the problem of cutting its staff. It is an extremely difficult job. Nowhere, obviously, is it more difficult than in the public service.
I had some experience a few years ago in an industrial firm where it became necessary to reduce administrative staff, to thin out, to shake out, to redeploy—whatever the current jargon is—in a period of stringency. It was for me a very educative process, principally because I became aware for the first time, in a way which only personal experience can bring home, of the way in which economic pressures can do their job in these circumstances.
Where a private firm which is subject to the test of profit and of profitability finds itself in a position where its costs are increasing and perhaps its market is not expanding as fast as it expected and it is, therefore, faced with declining margins and diminishing profitability on its capital, if it is to remain in business and to continue to attract new capital, it has to do something about it.
I sat in a series of meetings spread over a period of several months in which this fact percolated right down the organisation, an organisation which worked on a fairly sophisticated budgetary system, and where the budgets for the ensuing year, having been presented in their original form, where they were all collated at the top produced an entirely unacceptable result with the consequence that they were rejected. Each of the managers down the line was told, "You must produce a better result than this. This is simply not good enough".
The managers were then faced with the task of increasing the profitability or, if theirs was purely an expenditure department, reducing the expenditure, of their departments. It was because right from the very top of the firm this pressure was driven downwards through the organisation that there was an effective shake-out, a substantial streamlining of the administration of the firm and its various departments, with the result that, when the budget was represented—in fact, it came half way through the year because of the time these things take—


the profitability of the enterprise was back at an acceptable level.
It was painful for those involved. There were inevitably hard cases. I hope that it can be said that they were dealt with generously. It was only because of the acute economic pressure of having to operate in a competitive atmosphere that this very necessary work was done. This was, for me, a lesson which I hope I shall never forget. It was for me, not necessarily the most important, but one of the vital indicia of the value if profit as a test of efficiency.
This does not work in the public service. It does not really work—or it only half works—in the nationalised industries. As my hon. Friend the Member for Farnham (Mr. Maurice Macmillan) said, this is one of the reasons why it is wrong to expand the public sector and to reduce the area over which the test of profitability can operate. It is almost impossible to import comparable pressures into any public administrative set-up.
Much has been said about local authorities. Some of the examples of local authority extravagance, particularly that given by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) of the £600,000 which the Greater London Council proposes to spend on public relations, show the extent to which local authorities, in spite of their being precepting authorities, in spite of their having to go to the ratepayers, who, after all, have been as hard hit as any group of citizens, to raise annual revenue, are still isolated from the sort of pressures which can prevent managers, for that is what they are, from taking these decisions and from apparently being prepared to expand their staffs to this extent.
If it is so difficult for local authorities to do this, how much more difficult must it be for Government Departments to do it? This is the context in which a Government Department must operate, whether it be an organisation and methods division, or whatever it may be, that is charged, or which ought to be charged, with the responsibility of constantly scrutinising its manpower.
This imposes a duty on Ministers, because this pressure can come only from the top, to set themselves the most stringent targets, the most stringent budgets,

which they must on no account allow anybody to exceed. These must be determined, so far as possible, on a comparative basis, either comparative with last year or comparative with other Departments. Indeed, why not have a comparison with other countries?
6.15 p.m.
One of the ways in which private industry has been able to tune up its efficiency—it is doing this all the time—is by what are called inter-firm comparisons. Under the British Institute of Management there is a subsidiary organisation which deals entirely with inter-firm comparisons. This organisation is enabling companies and, indeed, quite small departments of companies, to compare the efficiency of their operations by the use of what are called management ratios.
I am far from convinced that this is not possible in the public service. It ought to be made possible because, as I have demonstrated, the need for techniques to supplement pressures—because the pressures are largely non-existent, certainly not to anything like the extent to which they exist in the private sector—is paramount.
These Clauses set out one method by which it would be possible to bring some pressure to bear on the Ministers responsible for Departments by setting them a target, by posing them a situation at which they start at the beginning of the year and on which they have to improve by the end of the year, at which stage they have to come back to the House.
I am under no delusion that this could ever be an adequate substitute for the sort of economic pressures which can operate in the private sector, but it would be a darn sight better than nothing. This is the case for the Clauses. It is because we want to impose from the top—from the House, through the Ministers concerned—the overriding pressure which will compel them to bring to bear the most rigorous scrutiny of their staffing requirements that I believe that the case for the Clauses is overwhelming.

Mr. MacDermot: This debate is one of those rare debates that succeed in achieving the almost impossible task of warming the hearts of Treasury Ministers. This debate does so for two reasons. The first is that it deals with the subject which is our perpetual concern, which is how


to contain the growth of public expenditure. The second is that in relation to this debate the premises upon which the Clauses are founded, and which were so clearly expounded by the right hon. Member for Enfield, West (Mr. Iain Macleod) at the outset of his speech, provide a complete justification for everything that we have been saying as to the economic effects of the new tax.
What is being said is that the tax will compel all companies and all businesses in the services sector to scrutinise their manpower usage most carefully and to cut it down and prune it wherever they can. This is what we said that the tax would do.

Mr. Ridley: Mr. Ridley rose——

Mr. MacDennot: It is surprising how hon. Members hardly want to let me finish a paragraph before they interrupt. I have listened patiently for 2¼ hours. If hon. Gentlemen want me to, I am prepared to give way, but I suggest that I should be allowed to elaborate my arguments before giving way.
I repeat that this is what we have said would be one of the effects of the new tax. I remember on several occasions my right hon. Friend the Chief Secretary being jeered at when he advanced this proposition. The right hon. Member for Enfield, West told us that businesses will do it, and do it within 12 months. The right hon. Gentleman implied that many of them would be cutting their staffs by 6 per cent., or something of that order, directly as a result of the tax.
I do not know whether there will be many businesses who will succeed in achieving that, but those were the premises upon which the right hon. Gentleman based his argument and which were elaborated by other hon. Members. The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) also did it. The argument was that, because this exercise had to be carried out vigorously in the private sector, something similar should be done in the public sector.

Mr. Boyd-Carpenter: If the hon. and learned Gentleman will refer to my speech, he will find that I said that the tax was intended to have this effect.

Mr. MacDermot: I have so many pieces of paper that it may take me a little while to find the note I made of the right hon. Gentleman's point. I think that the right hon. Gentleman, when he refers to HANSARD, will see that my summary of what he said is correct.
I felt a lot of sympathy for what my hon. Friend the Member for Sheffield, Attercliffe (Mr. John Hynd) said in his intervention, that this debate is an interesting reflection on how the Opposition have chosen to use their time under the Guillotine. They have presented two new Clauses which I do not think any of them thought for a moment could be accepted in the form in which they are put forward. If they do have any thoughts on that line, I shall try to deal with them briefly.
The right hon. Member for Enfield, West, congratulated the anonymous draftsman of the Clause on his ingenuity in managing to get this debate within the rules of order. This was perfectly legitimate, and something that is frequently done by Oppositions to seize the opportunity to raise an important subject of public interest, and to have a debate on it if they can bring it within the rules of order. That is what has happened here.
I welcome the subject as one that I should like to see debated more often and more fully in the House. One of the first speeches I made as Financial Secretary was in reply to a debate on a Report of the Estimates Committee which examined the Treasury control of establishments throughout the Civil Service—this very subject.
While some hon. Members have made very interesting and thoughtful speeches dealing with the serious aspect of this matter, other hon. Members have produced rather emotive phrases about the growth of the bureaucracy which is strangling us all, and so forth. They were rather irresponsible speeches. One knows the contradictions in the minds of hon. Members opposite on this subject. They love making speeches, particularly in their constituencies, saying how their party is out to cut down the bureaucracy, to support free enterprise and all the rest. They attack the growth of snoopers.
But once they become the Government, they pass legislation week by week which increases the number of snoopers, and they have to go into a self-denying ordinance while they are in office until they can again attack the growth in bureaucracy and the number of snoopers. As soon as they are in Opposition again, they let themselves go. But this contradiction does not inhibit them from making speeches, here and outside, constantly demanding that the Government should do this and the Government should do that, all of which would result in substantial increases in the size of the Civil Service and the number of snoopers.
Even the hon. Member for the City of Chester (Mr. Temple), trying strenuously in the debate to make a speech in favour of cutting down the size of the Civil Service, could not refrain from saying that not nearly enough public money was being spent on building new offices and installing new computers for local authorities. This is the dilemma which we are all in. The things which we want to achieve cost money and manpower. The Amendments to this Bill put down by the Opposition would result, if accepted, in very substantial increases in the numbers of civil servants required to administer the Bill when it becomes an Act.
Even the concessions and alterations which have been made in the Bill since my right hon. Friend the Chancellor of the Exchequer first announced his proposals in his Budget speech have resulted in nearly doubling the additional number of civil servants required to administer the Bill. This sort of factor must be taken into account.
Many criticisms have been made about the rough edges in this legislation. But one of the things which guided my right hon. Friend in selecting this form of tax was that it could be got into operation this year, with only a relatively small increase in the Civil Service compared with the vast increase which would have been needed for the very much more sophisticated type of tax which has been urged on us by hon. Members on both sides of the House.
I ask the House to face up to the sort of dilemma which all Members who have been Ministers know one inevitably faces when one tries to frame new legislation

in a way that will be economical in manpower. As the junior Treasury Minister responsible for the manpower aspect, I find that the thought has increasingly been forcing itself upon me that a time is coming when we shall need a form and degree of scrutiny of the use of manpower perhaps almost as tight and as thorough as there is on the purely financial side of the control of expenditure.
It is an exceedingly difficult task. But I think that it is one that we have to shoulder increasingly, and for that reason I gave the answer which was criticised earlier by the right hon. Member for Enfield, West, when I was invited to suggest that we should try now to get a cut in the Treasury. I pointed out that only a modest increase in the size of the Treasury has taken place, and that the increase is mainly in that very division so highly praised, and rightly praised, by the hon. Member for Liverpool, Garston (Mr. Fortescue).

Mr. Iain Macleod: I very much agree with what my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) said about the Organisation and Methods Division in the Treasury. It is not in dispute that it is extremely efficient. But the increase in the Treasury is not small. The increase of something like 70 does not take into account the fact that there are now two economic Departments where there was previously one, and although those transferred with work are accounted for in the Financial Secretary's Answer yesterday, he must also take responsibility for all the vast new recruitment to the D.E.A., which is now doing the work that was done by the Treasury before 1964.

Mr. MacDermot: They are doing work that was not done by the Treasury—this is why the D.E.A. was established—and only a very small section of the Treasury was transferred to the D.E.A. when it was set up. Incidentally, the number of Ministers at the Treasury has been reduced from four to three, and I do not think that anybody has complained about the productivity of Treasury Ministers in the past two years. I have experienced no harder work in my life nor known a more hard-working organisation or Department than the Treasury. In view of the vast area of its work and how far its tentacles spread, as


we are constantly reminded, I was surprised when I found what a numerically small Department it is compared with many others.
I shall not spend a great deal of time on the proposals contained in the Clause, because it is patently an attempt to get a debate of this kind within the rules of order. It proposes that if the overall strength of the non-industrial Civil Service has not been reduced by 6 per cent. within a year, office workers outside would cease to be non-qualifying. This would have rather curious results. It would not mean that all office workers would attract a refund or premium. Industries within the manufacturing sectors whose office headquarters were in a separate establishment, which could not be treated as one with their factory, would get the refund or premium in respect of workers there, or, where the non-qualifying workers at the moment outnumber the qualifying workers, the Clause might tip the scale and enable them to qualify.
If it is intended as a sanction for bringing great pressure to bear on my right hon. Friend to cut down the scope of the Civil Service, it would not be a very large or effective deterrent. I shall not dwell on that, because I want to come to the substance of the argument. Ministers of all Administrations since the war have sought to grapple with this problem. When the war ended there were about 452,000 non-industrial civil servants. The number fluctuated during the next few years fairly considerably.

Mr. Iain Macteod: This is excluding the Post Office, I take it?

6.30 p.m.

Mr. MacDermot: I am much obliged—excluding the Post Office, which gives a better picture.
The number rose in 1947 to 460,000, and it then fluctuated as follows: 1948, 435,000; 1949, 459,000; 1950, 440,000; 1951, 425,000. That was the time when there was a change of Government. The number then went up again to 435,000 in 1952; and thereafter it fell steadily year by year until 1959, when it reached 377,000.
Thereafter, the number has risen steadily every year: 381,000, 386,000, 396,000, 406,000, 415,000. This was

when we came into power. I should say that the dates do not quite correspond because these are figures at 1st January. The number at 1st January, 1964, was 415,000. On 1st January, 1965, it was 419,000, and on 1st January this year it was 426,000. At 1st April, the end of the financial year this year, it was 430,000. That is an increase of 3·7 per cent. since we took over in October, 1964.
As has been stressed repeatedly, since the sanction and economic force of the profit motive, which applies throughout, or mainly, in the private sector to contain expansion, does not apply in the Civil Service, one must look for other ways. All Governments from time to time try to have a drive in reducing their staffs in the Civil Service. One has the impression, anyway, that that happens from time to time. But I think that all with experience of those efforts have found that they do not tend to be very productive. One may gain a few reductions here and there at the margins, but this is not the way in which one achieves anything really effective.
Inevitably, one depends on the expert services, on the Organisation and Methods Division. Following the recommendations of the Plowden Committee, some years ago, most of the main Departments have their own Organisation and Methods divisions. The Treasury both performs a general co-ordinating function and helps other Departments in this respect. I entirely endorse what the hon. Member for Garston said. It is widely recognised, outside the Service as well, that the expertise of the Organisation and Methods Division of the Treasury will bear comparison with that of any other such organisation either in this country or elsewhere. The Treasury Organisation and Methods Division maintains a very high standard. It both helps and advises other Organisation and Methods Divisions, co-ordinating their work, and performs these functions for those Departments which have not their own Organisation and Methods Division.
I commend to anyone who is interested in this work the Report of the Estimates Committee, two years ago, which went into the whole subject. The Committee made a number of recommendations for the improvement of Treasury control of establishments, most of which have now


been implemented, but, by and large, it gave, as it were, a clearance certificate to the effectiveness of the system.
I think that the right hon. Member for Kingston-upon-Thames put his finger on the key point. It is not possible, as he said, to secure significant reductions unless one is prepared to abandon policies. It is the development of policies which has been responsible for the growth in the Civil Service since 1959, which has continued under all Governments. As has been said, our published Estimates for 1966–67 envisage a further increase of 13,000, and, as I made clear in answer to a Question, as a result of further developments in policy since then we now put that estimate at 17,000.
The main additions involved in those figures are as follows. In the Ministry of Pensions and National Insurance the figure is 1,950, and most of these are concerned with the new earnings-related benefits which were welcomed on both sides of the House. If hon. Members want cuts, they must realise that, unless and until one can achieve reductions through computerisation, an immediate cut of the kind suggested in the Clause would inevitably mean cuts in services.
In fact—the process was initiated at the time when the right hon. Member for Kingston-upon-Thames was in charge of the Ministry—the Ministry of Pensions and National Insurance makes extensive use of computers. This process is going ahead and will be continued. Indeed, if it had not been undertaken, the growth in the Ministry would have had to be considerably greater than it has been if these policies were to be achieved.
I take next the new Ministry of Social Security, to be set up under legislation now before Parliament. The non-contributory benefits schemes under that Ministry will involve a further 1,200 staff. Setting up the Land Commission will, to start with, involve about 1,800 additional staff. The point has been made that, with the present overall shortage of valuers, the next rating revaluation has had to be deferred. Quite true. But this is one of the problems of priority which confronts any Administration at a time of manpower shortage. It is a matter of policy to decide which is more important.
Ought we to set up the Land Commission which can try to tackle the

problem of land prices and also institute a system for recovering a share of betterment for the public, a principle which is accepted by both sides of the House, and which in itself would account for a very large part of the staff? Which is the more important, to do that or to carry out the next rating revaluation? We think it more important to establish the Land Commission. This is an example of the way in which policy determines increases in staff.
The new taxes introduced last year have thrown a great additional burden on the Inland Revenue, and 1,600 of the increase is due to that. One cannot overhaul and reorganise the system of company taxation, with complicated, but, we think, fair transitional provisions, without throwing a great administrative burden on the Inland Revenue and requiring additional staff. We believe that this was something which needed to be done urgently. There is dispute about the way in which it was done and about particular provisions, but I think I am right in saying that it is generally agreed that it was right to introduce the Corporation Tax system.

Mr. Patrick Jenkin: Has the hon. and learned Gentleman any idea of the extent to which that increase in staff of the Inland Revenue is attributable to the Corporation Tax and how much is attributable to the Capital Gains Tax?

Mr. MacDermot: The hon. Gentleman need not worry. I was about to say that a substantial part of that increase is due to the introduction of the Capital Gains Tax system.
That is a system which, to start with, will produce relatively little from a Revenue point of view. To date, it has produced about £375,000. But that is inevitable if one introduces a Capital Gains Tax system and decides not to make it retrospective. If it is to operate only from the date when it is introduced, it is bound to produce very small returns for quite a long time. Meanwhile, of course, one has to set up the administrative organisation.
Hon. Members have criticised the details ad nauseam, but the principle of the Capital Gains Tax system was accepted on both sides of the House.[An HON. MEMBER: "No."] There were some hon. Members who took another


view, but it is fair to say that the Opposition Front Bench spokesman accepted that a Capital Gains Tax system was needed. They may have thought that we made ours too elaborate, because we tried to make it too fair, but, error or not, that was a policy decision which resulted in those increases in staff.
Others are due to a miscellaneous series of decisions—to improve and widen the system of land registration, something which has been pressed for over a number of years, to improve our prison system and to introduce a better system of vehicle examination and driver testing. These are the kind of decisions that have resulted in these increases in the Civil Service which are criticised.
The Measures themselves, when proposed and introduced, are almost always wholly welcomed and then afterwards hon. Members put down Questions asking by how much the Civil Service has grown in the past 12 months and how much it is estimated to grow in the next 12 months, without accepting that they themselves bear a share of responsibility in having voted for Measures which resulted in those increases.
Turning to local authorities, the proposal is of the same kind. Is it suggested that local authorities can bring about a 6 per cent. reduction in their staff? What hon. Member is prepared to get up and say he thinks that his own local authority can and should reduce its staff by 6 per cent.? If any hon. Member does so, my hon. Friend the Parliamentary Secretary to the Ministry of Housing and Local Government has said he will be very glad to go into the question and take it up with the local authority concerned.
The right hon. Gentleman who wishes to intervene knows of the great difficulty that his particular local authority is having which to a very large extent is due to the widespread changes introduced in the London Government Act by the party of hon. Members opposite.

Mr. Boyd-Carpenter: There is another local authority to which I would refer, the Greater London Council. Will the hon. and learned Gentleman deal with the suggestion I pressed upon him, that the Government should take steps to halt the expansion in that authority's services,

particularly in respect of the very large information service which is now proposed?

Mr. MacDermot: That, again, is an authority which was set up as a result of legislation by the party of the right hon. Gentleman. I do not know the details of the particular case to which the right hon. Gentleman had referred. I would only point out that the Greater London Council is, I imagine, the largest local authority in the world, responsible for the administration for a population which is substantially greater than that of a very large number of sovereign States in the world; and if one looks at that authority's information services in that relativity, I wonder whether it is quite as extravagant and disproportionate as the right hon. Gentleman suggests. But no doubt the point which he has taken up with my right hon. Friend the Minister of Housing and Local Government will be looked into.

Mr. Boyd-Carpenter: Will the hon. and learned Gentleman bear in mind that it is proposed to quadruple the expenditure by this authority on information, at a moment when he is urging economy on all local authorities? Will he give an undertaking not that the Ministry of Housing and Local Government will do anything, but that the Treasury will concern itself with this matter?

Mr. MacDermot: I am certain my right hon. Friend the Chief Secretary, who is responsible on this side within the Treasury, has heard the remarks of the right hon. Gentleman and will give them the attention I am sure they deserve; but I am not myself in a position, as he will appreciate, to answer the particular point that he has raised.

Mr. Fortescue: I, too, would like to accept the challenge of the hon. and learned Gentleman in respect of my own local authority, the City of Liverpool, with particular reference to its recent insistence on the use of direct labour for public works. This is a function which has greatly increased the staff of that local authority and one which, in my view, is not a proper function for local authority. It seems to me to be an ideal example of the kind of thing the hon. and learned Gentleman is talking about.

Mr. MacDermot: I do not know whether the hon. Gentleman is assuming that as a result of direct labour there will be a greater wastage of manpower, which is the point which we are discussing; but that is not a proposition I would accept. An hon. Gentleman wanted my right hon. Friend the Home Secretary to divest himself of responsibility for public houses in Carlisle. I do not know whether he wanted public houses closed or not, but presumably they have to be managed and I do not see what manpower saving would result.

Mr. Boyd-Carpenter: I must respond to the hon. and learned Gentleman's challenge. If he will investigate he will see how heavy is the manning of these nationalised public houses and the administrative structure in the Home Office to deal with that.

Mr. MacDermot: That is something which has happened since the right hon. Gentleman himself was Chief Secretary to the Treasury?

6.45 p.m.

Mr. Fortescue: I understood the hon. and learned Gentleman to say that he challenged any Member on this side to name a local authority which he would like to have investigated.

Mr. MacDermot: I passed on the invitation from my hon. Friend the Parliamentary Secretary for the Ministry of Housing and Local Government to any hon. Member who wishes to do so to take up such matters with him in detail, when he will gladly go into them with the hon. Member concerned.
Finally, may I try to put the particular point about which I was asked, which is made in Amendment Nos. 114 and 115, with which a number of other hon. Gentlemen have dealt—the question of how repayment is to take place with the local authority and why the provisions of Clause 4(2) are in this form.
The hon. Member for the City of Chester (Mr. Temple) is not quite right in saying a working party is sitting to devise the principle of how local authorities will pay and be reimbursed and whether or not this should be a paper transaction. The Minister of Housing and Local Government has held meetings with the local authority associations

to tell them of the suggested arrangements for reimbursing the tax and at one meeting one treasurer proposed that it should be a paper transaction. But he was told that that was not possible, that it was a tax which had to be paid on a stamp. He was told that proposals were being put forward for reimbursement.
These are that local authorities will provide the Ministry of Housing and Local Government with estimates of their annual tax payments and they will then be reimbursed in equal monthly instalments, commencing in mid-October of 1966. The total sum reimbursed will be adjusted afterwards when the actual tax payments are available, after the 12 months. In other words, I answer the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) by saying, yes, there will be reimbursement of the actual amounts but they will not be taking place month by month. This is the proposal.
I should say that it is intended to hold one more meeting with the local authority associations, to deal with any queries or suggestions for simplifying this arrangement, but that is the broad nature of the proposal. It was to try to work out such a scheme which would be administratively simpler and achieve the same object in the end by reducing the number of staff and personnel, something which we are all urging, that we chose the method proposed in Clause 4(2), allowing flexibility for the system.
Of course, there is no question of making any hidden premium payment or anything of that kind. At the end of the day the local authority will be paid the amount to which it is entitled; but with this flexibility we can achieve greater administrative economy than it would be right to try to do in the case of repayments to individual employers. The particular case of dentists, taken by the hon. Gentleman, is a separate and different one.

Sir John Hobson: Does the hon. and learned Gentleman intend to move Amendment No. 73 when it is called under the Guillotine?

Mr. MacDermot: No, we do not propose to move any Amendments. They are not necessary, because under the


existing wording we would not be entitled to pay more than the amounts which have been paid. But we do not want to tie ourselves, because under this system we might pay more in a particular month, which would be illegal, and we would be forced back on a highly complex system of repayments.
Continuing on the question of the dentists, the fees take account of the global amount of the S.E.T. liability. The dentists would then not receive direct reimbursement, but be paid on an item of service basis. It should be a consequence of this that those employing more than the average number of ancillaries would presumably be doing more work and in consequence earning more fees. Thus, their higher state of liability would be indirectly offset by the fee system.
This is an example of the case which is administratively far simpler than trying to make individual repayment to every dentist precisely of the amount which he has paid. It follows the principle overall that the remuneration of dentists should cover their expenses and it is intended to, and, I think, will in practice, work out fairly in individual cases. That is why this system has been adopted.

Mr. Ridley: I am grateful for that explanation, which has cleared up some misapprehension, but will the hon. and learned Gentleman undertake to review the working of this arrangement after a certain period because of the misapprehension, in case it is not working properly? I am not sure that it is a clever way to do it.

Mr. MacDermot: I certainly give that undertaking. If, in operation, the dentists feel that it is not working fairly, we will gladly reconsider it.
The Amendments which you selected, Mr. Speaker, cover a rather wider ground, but I have confined myself to the subjects raised in the debate, which were primarily the Civil Service and the local authorities.

Sir J. Hobson: I want, first, to deal with local authorities. By not accepting Amendment No. 73, the Financial Secretary has left open the power for any succeeding Government, or any change of Administration if it remains Socialist, to pay a premium. It is no answer to say

that payments on account are to be made, for in making the final payments the Government could easily exceed the amount by temporary payments and that would certainly not be an infringement of the arrangement by which Parliament has laid down that this device is not to be used for paying premiums to local authorities. I cannot understand why the Government are not prepared to accept Amendment No. 73.
The other notable feature of the local authority problem is that this is the first time that the House has been told during the whole passage of the Bill, or that any public information has been given, about the arrangements for local authorities. We now discover that whereas everybody else at this time of financial pressure and crisis is to wait five months to get his money back, local authorities are to be in the special position of getting it back after one month. This distinction is very surprising.
On the general issue of the number of civil servants employed, the Labour benches have been almost entirely devoid of Government supporters showing the slightest interest in this topic. The only speech from that side of the House was from the hon. Member for Sheffield, Attercliffe (Mr. John Hynd), who sniped at the Opposition for raising the topic at all. He was given the lie direct, both by the Financial Secretary, who said that this was a subject of very considerable public importance, and by the nature of the Financial Secretary's speech, which clearly recognised what an important topic this was.
While the hon. and learned Gentleman dealt with the topic with his usual charm and grace and, no doubt truthfully, said that his heart had been warmed, it did not seem to us that his mind or activity had been stimulated one iota into doing anything at this critical time when everybody else in the country is being expected to make sacrifices. His whole attitude was that while this was a very difficult problem, everything could go on as usual and that he would keep on trying, as we know he does, but that in the end it came back to Government policies which were what cost the money and the manpower.
That is exactly what we all know. That is exactly what we are complaining about. Over the 21 months which the Labour Party has been in office, there have been


14,900 extra employees at an annual extra cost of £10 million, and we think that something should be done about it. We listened to the additions which the hon. and learned Gentleman enumerated, but we noticed the total lack of any sense of urgency that something should be done to cut down this manpower, for the Government themselves to recognise that there is a crisis and to put pressure to reduce

the use of manpower. We find the hon. and learned Gentleman's answer unacceptable and I must advise my right hon. and hon. Friends to divide the House.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 185, Noes 260.

Division No. 157.]
AYES
[6.55 p.m.


Alison, Michael (Barkston Ash)
Grimond, Rt. Hn. J
Noble, Rt. Hn. Michael


Allason, James (Hemel Hempstead)
Gurden, Harold
Nott, John


Awdry, Daniel
Hall, John (Wycombe)
Onslow, Cranley


Baker, W. H. K.
Hall-Davis, A. G. F.
Orr, Capt. L. P. S.


Balniel, Lord
Hamilton, Michael (Salisbury)
Orr-Ewing, Sir Ian


Batsford, Brian
Harrison, Col. Sir Harwood (Eye)
Osborn, John (Hallam)


Beamish, Col. Sir Tufton
Harvey, Sir Arthur Vere
Osborne, Sir Cyril (Louth)


Bennett, Sir Frederic (Torquay)
Heald, Rt. Hn. Sir Lionel
Page, John (Harrow, W.)


Bessell, Peter
Heseltine, Michael
Pearson, Sir Frank (Clitheroe)


Biffen, John
Higgins, Terence L.
Peel, John


Birch, Rt. Hn. Nigel
Hiley, Joseph
Percival, Ian


Black, Sir Cyril
Hill, J. E. B.
Pike, Miss Mervyn


Body, Richard
Hobson, Rt. Hn. Sir John
Pink, R. Bonner


Bossom, Sir Clive
Holland, Philip
Pounder, Rafton


Boyd-Carpenter, Rt. Hn. John
Hordern, Peter
Powell, Rt. Hn. J. Enoch


Boyle, Rt. Hn. Sir Edward
Hornby, Richard
Price, David (Eastleigh)


Braine, Bernard
Howell, David (Guildford)
Prior, J. M. L.


Brinton, Sir Tatton
Hunt, John
Pym, Francis


Brown, Sir Edward (Bath)
Hutchison, Michael Clark
Quennell, Miss J. M.


Bruce-Gardyne, J,
Irvine, Bryant Godman (Rye)
Rawlinson, Rt. Hon. Sir Peter


Buchanan-Smith, Alick (Angus, N&amp;M)
Jenkin, Patrick (Woodford)
Renton, Rt. Hn. Sir David


Buck, Antony (Colchester)
Jennings, J. C. (Burton)
Ridley, Hn. Nicholas


Bullus, Sir Eric
Johnston, Russell (Inverness)
Rossi, Hugh (Hornsey)


Campbell, Gordon
Jones, Arthur (Northants, S.)
Russell, Sir Ronald


Carlisle, Mark
Jopling, Michael
St. John-Stevas, Norman


Carr, Rt. Hn. Robert
Joseph, Rt. Hn. Sir Keith
Scott, Nicholas


Cary, Sir Robert
Kaberry, Sir Donald
Sharples, Richard


Clark, Henry
Kershaw, Anthony
Shaw, Michael (Sc'b'gh &amp; Whitby)


Clegg, Walter
Kimball, Marcus
Sinclair, Sir George


Cooper-Key, Sir Neill
King, Evelyn (Dorset, S.)
Stainton, Keith


Cordle, John
Kirk, Peter
Steel, David (Roxburgh)


Corfield, F. V.
Knight, Mrs. Jill
Stodart, Anthony


Costain, A. P.
Lambton, Viscount
Stoddart-Scott, Col. Sir M. (Ripon)


Craddock, Sir Beresford (Spelthorne)
Lancaster, Col. C. G.
Summers, Sir Spencer


Cunningham, Sir Knox
Langford-Holt, Sir John
Talbot, John E.


Currie, G. B. H.
Lewis, Kenneth (Rutland)
Tapsell, Peter


Davidson, James (Aberdeenshire, W.)
Lloyd, Rt. Hn. Selwyn (Wirral)
Taylor, Edward M.(G'gow, Cathcart)


d'Avigdor-Goldsmid, Sir Henry
Longden, Gilbert
Teeling, Sir William


Dean, Paul (Somerset, N.)
Loveys, W. H.
Temple, John M.


Deedes, Rt. Hn. W. F. (Ashford)
Lubbock, Eric
Thatcher, Mrs. Margaret


Dodds-Parker, Douglas
McAdden, Sir Stephen
Thorpe, Jeremy


Doughty, Charles
Mac Arthur, Ian
Turton, Rt. Hn. R. H.


Eden, Sir John
Macleod, Rt. Hn. Iain
van Straubenzee, W. R.


Elliott, R. W.(N'c'tle-upon-Tyne, N.)
McMaster, Stanley
Vaughan-Morgan, Rt. Hn. Sir John


Evans, Gwynfor (C'marthen)
Macmillan, Maurice (Farnham)
Vickers, Dame Joan


Eyre, Reginald
Maddan, Martin
Wainwright, Richard (Colne Valley)


Farr, John
Maginnis, John E.
Walker, Peter (Worcester)


Fisher, Nigel
Marten, Neil
Ward, Dame Irene


Fletcher-Cooke, Charles
Maude, Angus
Weatherill, Bernard


Fortescue, Tim
Maudling, Rt. Hn. Reginald
Webster, David


Foster, Sir John
Mawby, Ray
Wells, John (Maidstone)


Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Maxwell-Hyslop, R. J.
Whitelaw, William


Gibson-Watt, David
Maydon, Lt.-Cmdr. S. L. C.
Wills, Sir Gerald (Bridgwater)


Giles, Rear-Adm. Morgan
Mills, Peter (Torrington)
Wilson, Geoffrey (Truro)


Gilmour, Sir John (Fife, E.)
Miscampbell, Norman
Winstanley, Dr. M. P.


Glover, Sir Douglas
Mitchell, David (Basingstoke)
Wolrige-Gordon, Patrick


Godber, Rt. Hn. J. B.
Monro, Hector
Wood, Rt. Hn. Richard


Goodhart, Philip
Morrison, Charles (Devizes)
Wylie, N. R.


Goodhew, Victor
Mott-Radclyffe, Sir Charles
Younger, Hn. George


Gower, Raymond
Munro-Lucas-Tooth, Sir Hugh



Grant, Anthony
Murton, Oscar
TELLERS FOR THE AYES:


Gresham Cooke, R.
Nabarro, Sir Gerald
Mr. More and Mr. Blaker.


Griffiths, Eldon (Bury St. Edmunds)
Neave, Airey





NOES


Abse, Leo
Foley, Maurice
Mason, Roy


Albu, Austen
Foot, Michael (Ebbw Vale)
Mayhew, Christopher


Alldritt, Walter
Ford, Ben
Meltish, Robert


Allen, Scholefield
Forrester, John
Millan, Bruce


Anderson, Donald
Fowler, Gerry
Miller, Dr. M. S.


Archer, Peter
Fraser, John (Norwood)
Mitchell, R. C. (S'th'pton, Test)


Armstrong, Ernest
Fraser, Rt. Hn. Tom (Hamilton)
Molloy, William


Ashley, Jack
Freeson, Reginald
Morgan, Elystan (Cardiganshire)


Atkins, Ronald (Preston, N.)
Gardner, A. J.
Moyle, Roland


Atkinson, Norman (Tottenham)
Garrett, W. E.
Murray, Albert


Bacon, Rt. Hn. Alice
Garrow, Alex
Neal, Harold


Bagier, Cordon A. T.
Ginsburg, David
Newens, Stan


Barnes, Michael
Gourlay, Harry
Norwood, Christopher


Barnett, Joel
Gray, Dr. Hugh (Yarmouth)
Oakes, Gordon


Beaney, Alan
Greenwood, Rt. Hn. Anthony
Ogden, Eric


Bence, Cyril
Gregory, Arnold
O'Malley, Brian


Benn, Rt. Hn. Anthony Wedgwood
Grey, Charles (Durham)
Orbach, Maurice


Bennett, James (G'gow, Bridgeton)
Griffiths, David (Bother Valley)
Orme, Stanley


Bidwell, Sydney
Griffiths, Rt. Hn. James (Llanelly)
Oswald, Thomas


Binns, John
Gunter, Rt. Hn. R. J.
Page, Derek (King's Lynn)


Bishop, E. S.
Hamilton, James (Bothwell)
Paget, R. T.


Blackburn, F.
Hamilton, William (Fife, W.)
Pannell, Rt. Hn, Charles


Blenkinsop, Arthur
Hamling, William
Park, Trevor


Boardman, H.
Hannan, William
Parker, John (Dagenham)


Booth, Albert
Harrison, Walter (Wakefield)
Parkyn, Brian (Bedford)


Boston, Terence
Hart, Mrs. Judith
Pearson, Arthur (Pontypridd)


Bottomley, Rt. Hn. Arthur
Haseldine, Norman
Peart, Rt. Hn. Fred


Bowden, Rt. Hn. Herbert
Hattersley, Roy
Pentland, Norman


Boyden, James
Hazell, Bert
Perry, Ernest G. (Battersea, S.)


Braddock, Mrs. E. M.
Henig, Stanley
Perry, George H. (Nottingham, S.)


Bradley, Tom
Herbison, Rt. Hn. Margaret
Price, Christopher (Perry Barr)


Bray, Dr. Jeremy
Hooley, Frank
Price, Thomas (Westhoughton)


Brooks, Edwin
Horner, John
Price, William (Rugby)


Broughton, Dr. A. D. D.
Houghton, Rt. Hn. Douglas
Probert, Arthur


Brown, Rt. Hn. George (Belper)
Howarth, Harry (Wellingborough)
Pursey, Cmdr. Harry


Brown, Hugh D. (G'gow, Provan)
Howarth, Robert (Bolton, E.)
Rankin, John


Brown, Bob (N'c'tle-upon-Tyne, W)
Howie, W.
Redhead, Edward


Brown, R. W. (Shoreditch &amp; F'bury)
Hughes, Emrys (Ayrshire, S.)
Rhodes, Geoffrey


Buchan, Norman
Hughes, Hector (Aberdeen, N.)
Richard, Ivor


Butler, Herbert (Hackney, C.)
Hughes, Roy (Newport)
Roberts, Albert (Normanton)


Butler, Mrs. Joyce (Wood Green)
Hunter, Adam
Roberts, Gwilym (Bedfordshire, S.)


Cant, R. B.
Hynd, John
Robinson, Rt. Hn. Kenneth (St. P'c'as)


Carmichael, Neil
Jackson, Peter M. (High Peak)
Roebuck, Roy


Castle, Rt. Hn. Barbara
Janner, Sir Barnett
Rose, Paul


Coe, Denis
Jay, Rt. Hn. Douglas
Ross, Rt. Hn. William


Coleman, Donald
Jeger, George (Goole)
Rowland, Christopher (Meriden)


Concannon, J. D.
Jenkins, Hugh (Putney)
Rowlands, E. (Cardiff, N.)


Conlan, Bernard
Jenkins, Rt. Hn. Roy (Stechford)
Ryan, John


Corbet, Mrs. Freda
Johnson, Carol (Lewisham, S.)
Sheldon, Robert


Cousins, Rt. Hn. Frank
Jones, Dan (Burnley)
Shinwell, Rt. Hn. E.


Craddock, George (Bradford, S.)
Jones, J. Idwal (Wrexham)
Shore, Peter (Stepney)


Crawshaw, Richard
Judd, Frank
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Crossman, Rt. Hn. Richard
Kenyan, Clifford
Short, Mrs. Renée (W'hampton, N. E.)


Cullen, Mrs. Alice
Kerr, Russell (Feltham)
Silkin, John (Deptford)


Davidson, Arthur (Accrington)
Lawson, George
Silkin, S. C. (Dulwich)


Davies, Dr. Ernest (Stretford)
Leadbitter, Ted
Silverman, Julius (Aston)


Davies, G. Elfed (Rhondda, E.)
Ledger, Ron
Silverman, Sydney (Nelson)


Davies, Ednyfed Hudson (Conway)
Lee, John (Reading)
Skeffington, Arthur


Davies, Harold (Leek)
Lestor, Miss Joan
Slater, Joseph


Davies, Ifor (Gower)
Lever, L. M. (Ardwick)
Small, William


Davies, Robert (Cambridge)
Lewis, Ron (Carlisle)
Snow, Julian


Dell, Edmund
Lomas, Kenneth
Spriggs, Leslie


Dewar, Donald
Loughlin, Charles
Steele, Thomas (Dunbartonshire, W.)


Diamond, Rt. Hn. John
Luard, Evan
Stewart, Rt. Hn. Michael


Dickens, James
Lyon, Alexander W. (York)
Stonehouse, John


Dobson, Ray
Lyons, Edward (Bradford, E.)
Summerskill, Hn. Dr. Shirley


Doig, Peter
McBride, Neil
Swain, Thomas


Driberg, Tom
MacCoil, James
Symonds, J. B.


Dunn, James A.
MacDermot, Niall
Taverne, Dick


Dunnett, Jack
Macdonald, A. H.
Thomas, Iorwerth (Rhondda, W.)


Dunwoody, Mrs. Gwyneth (Exeter)
McGuire, Michael
Thornton, Ernest


Eadie, Alex
McKay, Mrs. Margaret
Tinn, James


Edwards, William (Merioneth)
Mackenzie, Gregor (Rutherglen)
Varley, Eric G.


Ellis, John
Mackie, John
Wainwright, Edwin (Dearne Valley)


English, Michael
Maclerman, Robert
Wallace, George


Ensor, David
McMillan, Tom (Glasgow, C.)
Watkins, David (Consett)


Evans, Albert (Islington, S. W.)
McNamara, J. Kevin
Weitzman, David


Evans, loan L. (Birm'h'm, Yardley)
MacPherson, Malcolm
Whitaker, Ben


Faulds, Andrew
Mahon, Peter (Preston, S.)
White, Mrs. Eirene


Fernyhough, E.
Manuel, Archie
Whitlock, William


Finch, Harold
Mapp, Charles
Wigg, Rt. Hn. George


Fitch, Alan (Wigan)
Marquand, David
Willey, Rt. Hn. Frederick


Floud, Bernard
Marsh, Rt. Hn. Richard
Williams, Alan (Swansea, W.)







Williams, Alan Lee (Hornchurch)
Wilson, William (Coventry, S.)
Yates, Victor


Williams, Clifford (Abertillery)
Winnick, David



Williams, Mrs. Shirley (Hitchin)
Winterbottom, R. E.
TELLERS FOR THE NOES:


Williams, W. T. (Warrington)
Woof, Robert
Mr. Charles R. Morris and


Willis, George (Edinburgh, E.)
Wyatt, Woodrow
Mr. Harper.

New Clause.—(PAYMENT OF INTEREST.)

(1) Interest at the rate of 4 per cent. per annum shall be payable on any sums in excess of £10 which fall to be paid by the Minister concerned under sections 1, 2, 4, 5 and 6 of this Act and shall become due from the date when the employer paid the Selective Employment Tax or if the amount of the tax paid by an employer in respect of which he has had no refund under this Act does not exceed £10, then from the date when such amount exceeds that sum.
(2) Interest due under this section shall be recoverable as a debt due from the Crown.—[Mrs. Thatcher.]

Brought up, and read the First time.

Mrs. Margaret Thatcher: I beg to move, that the Clause be read a Second time.
During the last debate the Financial Secretary pointed out that at any rate Treasury Ministers have had a high rate of productivity. By way of reply to that comment I would point out that during the progress of this Bill we have had a particularly low rate of productivity over concessions, even though there has been ample justification for concessions. I am now giving the Chief Secretary the chance, during the debate on this new Clause, to add to his productivity rate of concessions the one embodied in this new Clause.
During the Budget debate, when this proposal was first put up, the objects of the tax were announced. The first was to raise revenue and the second to secure deployment of labour. At no time was it mentioned that one of the objects was to deprive various organisations, from manufacturing industry to charities, of cash essential for carrying their day-today business. Yet this is exactly what will be happening under the new arrangements. On a previous occasion we moved an Amendment designed to make the payments in and out virtually coincident so that there was no measure of an enforced loan about it.
We were not successful in getting the Government to accept that Amendment, although it would have been a great deal better if they had done so. We are now obliged to move this Clause in mitigation of the present circumstances. If we cannot persuade the Government not to take

the money in until they are prepared to pay it out by way of refunds and premiums, we think that any enforced loan should carry a moderate rate of interest. During his Budget speech the Chancellor made great play about what his borrowing requirement would be. He said that it would be very small indeed this year, only about £287 million. It should now be considerably less because of the Prime Minister's "Budget", although that particular "Budget" contained so much juggling with figures that it is difficult to assess its precise effect.
The Chancellor will have to pay interest to secure that borrowing requirement. We got a clue through his speech as to the kind of rate of interest which he expected to have to pay. He noted that the new issue of National Savings Certificates was going well. That was because the rate of interest was considerably increased. When it was lower the certificates were going very badly. When it was put up to a rate of 5½ per cent., that is to say, 7¾ per cent. gross to the person paying the standard rate of tax, they began to go very well.
Clearly, for borrowed money the Chancellor expects that National Savings Certificates, to meet his borrowing requirements, would have to pay something akin to 7 per cent. interest. On National Development Bonds, announced during the Budget speech, the rate is 5 per cent. plus a £2 bonus, tax free, if the bonds are held five years to maturity.
The Chancellor of the Exchequer knows that he has to pay the ruling rate of interest on money for which he has to go to the market, which happens to be high, normally now between 5½ and 8 per cent. I note from this morning's Financial Times that three-month local authority money is costing 7⅝ per cent. Looked at against that background, the rate of interest proposed in the Clause, 4 per cent., is extremely modest. Having gone quickly through some of the rates of interest which Governments both expect to pay and which they do pay for money, we realise that 4 per cent. is a midway rate.
Let us consider certain other rates of interest. Income Tax, if it is not paid within three months of the due date, is charged at 3 per cent. from the date on which it should have been paid. That is a comparatively modest rate. The rate on Estate Duty is 2 per cent. from the date of death. On tax reserve certificates it is 3½ per cent. tax free, although the Chancellor of the Exchequer announced a new issue during his Budget speech. He believes that 3½ per cent. tax free is inadequate, but I am not sure what the new rate will be.
Certain other Departments of the Treasury are much more realistic in their interest payments. If land is compulsorily acquired, and the Government agency enters on to that land before compensation has been paid, interest is paid on the compensation at 7 per cent. This is a very apt analogy with what the Government are doing in connection with the Selective Employment Tax. They are entering on to the taxpayer's money and using it, but are not proposing to pay a brass farthing for the privilege. A creditor who has established his debt in the county court is entitled to 4 per cent. from the date of the judgment summons. If a legacy is due, that is charged at 4 per cent., from the end of the executor's year.
I hope that it will be clear from what I have said that we are asking for a very modest rate of interest. I hope that I shall not have to argue the matter very strenuously, because it goes without saying that a person should not be compelled to lend money without receiving interest. The Government are enforcing this loan which cuts down their borrowing requirements very considerably. They should pay a reasonable rate of interest for the money.
During the debate on the last new Clause, we heard that the merit of the claim has, in one way, been recognised by the concessions made to local authorities. If it is right that local authorities should get their money back in one month, surely it is right that other people who are not basically liable to pay it in the sense that the Government do not intend to keep it indefinitely should either have their money back quickly or receive a reasonable rate of interest.
The Clause would affect a number of organisations. It would affect industries. The Chief Secretary may say that later they will get a premium. Long before that—and there is no date fixed in the Bill—they will be desperately worried about how they will raise money to pay 25s. per man per week or 12s. 6d. per woman per week, particularly as bank advances will not be raised for this purpose, although the Chancellor of the Exchequer said in his Budget speech that some arrangement would be made. He said:
I shall be considering what steps may be needed to enable the banks to respond to temporary needs for credit in such cases."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1457.]
Therefore, the right hon. Gentleman accepted that the banks should be able to respond to temporary needs. The only thing he was considering was what steps should be taken to that end. He agreed that banks should be able to make arrangements to meet this need. He has gone back on that statement, and, therefore, manufacturers as well as other people are worried about how they will raise the money. I will not go into that matter in detail now, but it would be some token to them if by depositing the money with the Treasury they were to get a certain rate of interest.
7.15 p.m.
The Clause would affect some of those entitled to refunds, such as the fishing industry, mining and quarrying and research activities. All these are not basically liable to pay the tax. It is only because of an administrative arrangement that the money has to go in first before it is paid out. It is rather ironic that as a result of an administrative arrangement people will be forced to make an interest-free loan unless the Government accept the Clause.
The Clause was originally drafted to include local authorities. We heard for the first time today a little more about the arrangements concerning local authorities. It would have been better if we had heard about them before. The reason that we have not heard about them is that they were never made or thought out before the introduction of the Bill.
The other two groups which the new Clause would affect are charities and


qualified households. It is particularly hard on charities, which the Chief Secretary has conceded should not be deprived of their money, that they should have to make a tax-free loan to the Treasury. This is at a time when the call on charitable organisations is particularly heavy. From 5th September to past Christmas the Government will be taking in money from the charities at a time when they would normally be hoping to pay extra sums.
I think of those in Dr. Barnardo's Homes, the disabled and the old folk to whom the charities try to give extra treats over Christmas. Yet the money cannot be used for that purpose. It will have to go to the Treasury. It would be some token to them if the Treasury said, "We cannot pay you back on the arrangements we have made, but we will give you a moderate rate of interest on that money, so that when it is returned you will receive something for having lent it to us".
I turn to the next group, qualified households. Under the Clause, interest would not be due if the refund did not exceed £10. That would cut out some, although not all, of the qualified households. Here one sees exactly from whom the Government are compelling this loan. These are people who often live in households of comparatively slender means. They are being asked to deposit with the Treasury a very considerable part of their weekly income, interest free.
It is interesting to look at the family expenditure survey for 1965 which has recently been published in the Ministry of Labour Gazette. The average family of three which is usually rather better off than those in qualified households, spends 26s. 11d. a week on fuel, light and power. This means that a qualified household is compelled to deposit every week with the Treasury the equivalent of three days' coal and light, interest free. These are the people on whom the Government are imposing an enforced loan. The average family of three spends £5 18s. 8d. a week on food, approximately £2 per head per week. Qualified households are being asked to deposit with the Treasury, interest-free, the equivalent of two days' food for one person.
We cannot use a logical argument against this, because there is no logic which can justify it, but the Chief Secretary and, through him, the Chancellor of

the Exchequer, should recognise the merits of these claims by agreeing to pay a reasonable amount of interest on the money deposited. I have some idea of what the Chief Secretary will say in reply. He will say that there are administrative difficulties. There always are, particularly under this Government. They are one of the first Governments to permit administrative difficulties to take pride of place over equitable reasoning.
I know that there will be administrative difficulties, because I am reasonably aware of the National Insurance system. But, in a manufacturing industry, the large employer has to keep up to date with National Insurance stamps, because he has people leaving all the time and cards must be stamped. Moreover, the Ministry has inspectors who can easily call on the large organisations.
Some of the large employers pay by cheque, and it would be comparatively easy to see when they had paid in the money. Others pay by high value stamps, and it would be easy to see when they were purchased. Others pay by stamp impressing machines. As the Chief Secretary knows, one has to pay in advance for the number of impressions that a machine contains, and it will be quite easy to see when the money has been paid in that instance. It will be more difficult for anyone who relies on stamping an ordinary card.
The Chief Secretary could say that a stamp might not have been bought at the due date, but three months in arrear. That might have happened, because some people get behind in stamping cards. However, they do not usually get five months' behind. As the right hon. Gentleman knows, there are four staggers, one stagger going in each quarter. For anyone who employs a comparatively small number of people, the chances are that some cards will have to be going in every three months.
I am aware that there would be administrative difficulties, but the equitable case is so great that the administrative difficulties should be overcome. What we are asking for is very modest. The Chief Secretary will be the first to admit that I have been modest in my requirements throughout the Finance Bill and the present Bill, not that we have been any more successful as a result.


It might be said that sweet reasonableness has got us nowhere, and we shall have to bear that in mind for next year, because we might have to change our approach considerably.
I hope that on this occasion sweet reasonableness and equity will win the day, and that we shall at last get one concession from the Chief Secretary.

Sir D. Glover: In rising to support the Clause, though my criticism of it is that the rate of interest is too low, I should like to re-emphasise to the Chief Secretary that if he does not accept it or one similar to it, he will be saying that it is a capital levy that the State is extracting from the people concerned. The way that the Government's proposal will work is that people will pay in the money for five months before they receive anything back. They will be almost permanently three months in arrear, and the State will take that money from them virtually permanently.
What will happen to the firms concerned? Almost all industrial and commercial concerns, if they are worthwhile in their activities, work on a bank overdraft. According to the Government's policy, they will not be allowed to increase overdrafts at the bank to pay the Selective Employment Tax. That will mean that they will have to reduce turnover because they will have fewer funds with which to operate and more people will be put out of work. But, as that is the Government's intention, perhaps we should not complain too much about that.
Once the situation has eased, and if the Selective Employment Tax is still operative in its present form, what will happen in the future? Firms will have to borrow the additional finance from the banks, if their credit worthiness is such that the banks will grant them that facility, and they will have to pay the banks at least 1 per cent. above Bank Rate. As the Government have a Bank Rate of 7 per cent., which will probably exist for a considerable time, it means that on every £100 which firms loan to the Government they will probably pay 8 per cent. to borrow it and will not get anything back in interest from the State. Quite apart from the impost which they are paying, they will be 8 per cent. down on the money which they have been forced to lend to the State.
That cannot make sense. It cannot be something that the Government have thought out if they intend that situation to continue into the future. I can understand their saying that as part of their present policy they are deliberately not paying interest because they do not want people to borrow from the banks but, rather, to reduce their activities and turnover and therefore reduce the burden on the economy and put people out of work. I can understand that, for the next six months. The new Clause that we are debating would make a much more permanent, sensible and just system than the Government themselves have evolved. It is outrageous that the Government's proposals should affect not only firms but, if that is not bad enough, charities as well.
I do not know whether the Chief Secretary realises it, but the Dr. Barnardo's organisation will now have to raise £25,000 to go into the State coffers as a forced loan without interest. Of any appeal that it puts out at the moment, the first £25,000 will not be used for any service of Dr. Barnardo's at all. It will go straight into the Treasury's coffers, and Dr. Barnardo's will not even get interest on it. That is a tremendous thing to put into an appeal. People will be asked to subscribe to Dr. Barnardo's well knowing that the money which they subscribe will go to the Treasury and that Dr. Barnardo's will get no benefit from it at all. Can this really be the Government who spent years in the wilderness saying that they cared for the under-privileged?—yet they are doing this to every single charity.
If I may take the example of the little charity of which I happen to be chairman, the amount of loss that will accrue to it will probably mean that it cannot even put out an appeal for more money, because it will represent the small amount of capital that it has over and above its yearly expenses. That is something that the Government are doing deliberately.
I do not know about the administrative difficulty which my hon. Friend the Member for Finchley (Mrs. Thatcher) mentioned. I cannot see the administrative difficulty. If the State is to pay back to people a sum of money, it is obvious when they pay it back that they know how many people are involved in the


pay-back. If they know that, automatically they must know how much money was involved in the pay-in, and therefore they will know how much interest to include in the cheques when they pay the money back to the people who originally paid it to them.
I ask the right hon. Gentleman, even at this late stage, to accept this Clause or a similar one. It may be that my right hon. and hon Friends would not be wedded to the exact wording of their Clause. I think that the rate of 4 per cent. is too low, but it is at least some recompense, and it would provide an element of justice if the Government would accept it. If they refuse, firms will be asked to pay what is a capital levy, and subscribers to charities will be asked to pay a forced loan to the Government rather than to the service of the charities to which they are subscribing. I think that it is the most deplorable thing that any Government could do to the people concerned.

7.30 p.m.

The Chief Secretary to The Treasury (Mr. John Diamond): The hon. Lady the Member for Finchley (Mrs. Thatcher) prefacing her remarks with references to productivity, which I did not entirely follow, started by referring to the original purposes of the tax and to what my right hon. Friend the Chancellor said about it. In the column following the column from which the hon. Lady quoted, my right hon. Friend said:
As I was saying, it will prove in future years to be a very valuable addition to the measures available, first, as a means of raising revenue, and also as an incentive for labour economies and manpower redeployment. The scheme will produce an easing in home demand this year …
It was his intention that it should produce that, and this is part of the timetable of the phasing of the reduction of inflationary demand to which he referred on many occasions.
If we may go back to what the hon. Lady referred to at col. 1457, when my right hon. Friend was talking about the question of the refund and the delay, he said:
I have not overlooked this, and, against the background of the general credit restraint which it is necessary to maintain, I shall be considering what steps may be needed to enable the banks; to respond to temporary needs for credit in such cases."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 728, c. 1457–58.]

My right hon. Friend subsequently made it clear that, having regard to the background of general credit restraint—which everybody recognises has increased, not reduced, since he made that statement—he was not proposing to take any steps to respond to temporary needs for credit in such cases.
My right hon. Friend was making it perfectly clear that one of the purposes of the tax this year was to bring about a deflationary effect in the autumn. Thus, with regard to what the hon. Lady said about the original purposes of the tax, it is clear that it has never been the intention of my right hon. Friend that the position should be other than it now appears to me to be, and therefore all the arguments——

Mr. Patrick Jenkin: It has changed.

Mr. Diamond: I have read the original speech in which my right hon. Friend made the point clear. It has not changed since then, except to accentuate the need—this is the point which everybody is making—for further public restraint. This is what the popular phrase "freeze" means, further credit restraint, and it was on the basis of the credit restraint thought to be necessary on 3rd May that my right hon. Friend said what he did.
The hon. Lady's argument is that, as we have to put up with a forced loan, cannot we have some interest on it so as to soften the blow? I am afraid that the blow is not felt to be hard or unexpected, but let us examine the extent of it, because I do not think that hon. Members who have spoken have fully appreciated it.
The hon. Member for Ormskirk (Sir D. Glover) referred to all firms working on a bank overdraft and said that this would add to their difficulties. Perhaps I might give the House the recent figures of the liquid assets of British firms. At the end of March 1966, liquid assets amounted to approximately £3,500 million. The maximum amount of the forced loan, which will reach its peak at about the end of December, is slightly less than £160 million. Thus, I do not think that there will be any undue difficulty in meeting those demands.
The question also arises whether there is any justification—what the hon. Lady


referred to as the equity of the case—in making these repayments. The figure which I have given of £160 million is the combination of the premium which will be repaid and the refund which will be made. Of that £160 million, £140 million is premium. We do not accept that there is any case for treating the premium with special care, having regard to the fact that within six months, by about the middle of 1967, those companies which are in the premium-receiving categories, broadly the manufacturers, will be in balance, and from May, 1967, onwards will be in surplus. I am just making the simple point that there is no reason to be particularly sensitive about the premium aspect of it.

Mr. Patrick Jenkin: The right hon. Gentleman has left me behind. He said that £160 million was the amount of the forced loan, which is what it is. How, in those circumstances, can that contain any element of premium? Premium is not in any sense part of the loan, it is something which comes back in addition to the refund of the tax.

Mr. Diamond: I called it a forced loan because that was the phrase used by the hon. Lady, and because it is a forced loan. This is the method by which the tax is proposed to be collected. It will be collected in this way, and deliberately so. The hon. Gentleman will appreciate that there is no refund of the Selective Employment Tax paid by service industries. There is no question of a forced loan from them. What they have paid, they have paid for good.
The only question of a forced loan is the money received from the other two categories, those getting a refund which they would have had had it been repaid more promptly by the end of December, and those getting a premium, that is to say refund plus 7s. 6d., or whatever it is, who would also have received it had it been paid more promptly by the end of December. The longest period of the forced loan will be from the commencement of the payment of the tax until the end of December, and it will reach its peak on that date when the figure will be about £140 million for the categories entitled to receive refund plus premium.
I am sorry if I did not explain it sufficiently clearly, but the £20 million is for this category in the refund area alone, and by far the larger group—all the manufacturing categories—are those who are receiving the complete refund of what they have paid, plus what we call the refund of the premium.

Sir D. Glover: I do not know why the right hon. Gentleman says that the peak figure will come in December. I understood that the first repayment would be in February.

Mr. Diamond: The first repayment will be in January. It will be as early in January as we can arrange it. It may be that the figure at 2nd or 3rd January will be even higher than that at 31st December, but for all practical purposes it will be 31st December, and we want to arrange the repayment as early as possible in January.
Although the hon. Lady is talking about interest, basically what she is saying about it is a recognition of the difficulty, and if I can demonstrate that there is no major difficulty, there is no reason to have regard to interest. The difficulty, therefore, is one which I say relates only to £20 million worth of enforced loan from the refund categories, which will start to be repaid in January, and then be repaid in stages from that time onwards. On average the loan will run for about six weeks. It will be three months payment, repaid during the course of the following month, which I think we can call about six weeks as the average period of the loan. That will be the extent of it. Bearing in mind that the liquid condition of British firms is about £3,500 million, and the enforced loan, the only category which one could regard as being difficult, will represent £20 million, the burden is not likely to be especially heavy.
As to the purpose of the loan, it was not the intention that there should be any other than a marked reduction in inflationary demand in the autumn. But that does not deal with the special categories which the hon. Lady mentioned and to which we want to have regard. One is the charities and the other the qualified households. There could be real hardship in certain cases of qualified households, and we propose therefore to make special arrangements, which my


right hon. Friend the Minister of Pensions will be announcing in due course, for much faster repayment. That is the best way of meeting that case.
I do not know if the hon. Lady has been the honorary treasurer of as many charities as I have. Her experience may be different, but if there is any date when charities' receipts come in a rush—I know that they never have enough income—it is 1st January, when by far the most bankers' orders for covenanted subscriptions come in. There is a tremendous peak of income on 1st January and then receipts come in quarterly. Far from this Government having taken a harsh tax view of charities, we have done quite the opposite. We have, for the first time, established, in the Corporation Tax, a new firm attitude to charities.
The relationship between the Revenue and charities until that time was always ambivalent. Nobody knew where he stood and to what extent it was proper to engineer deeds of covenant, to what extent a charitable payment by a firm was a proper deduction. The question had to be answered firmly when Corporation Tax was introduced. We could have justified treating this as a special expense and not a deduction. We took the other view and put the charities on a firm foundation in their relations with the Revenue by making charitable payments a deduction for Corporation Tax purposes.
I am sure that the hon. Lady would not allege that we are unsympathetic to the needs of charities. Far from it. I hope that she will realise that, if the money had not been raised by this tax, it would have had to be raised in some other way. If we had adopted orthodox methods, Purchase Tax would have had to be carefully considered——

Mr. Iain Macleod: The right hon. Gentleman has said, rightly, that there are two special cases which are worrying us—the qualified household and the charity. What he said about the former is certainly welcomed on this side. He recognises that there may be hardship and he will do what he can under arrangements to be announced by the Ministry of Pensions to meet that. Could he not do exactly the same for charities? Suppose a charity could make the case that the interest-free loan would bring hardship,

would he consider special arrangements for that?

7.45 p.m.

Mr. Diamond: I was going on to say something approaching that. But I wanted first to make it clear that the charities must have no anxiety about their relationship for tax purposes. This is their main anxiety. One of the main reasons that they reacted as they did to the Selective Employment Tax was not so much the taxing position itself but because they felt that this was a challenge to their tax standing. I am glad to say that what we did in Corporation Tax is a major step, from which any future Government would have difficulty in departing.
Had we introduced a tax more easily and obviously accepted as an indirect tax, such as Purchase Tax—the S.E.T. is often referred to as an indirect tax—there would not have been the slightest question but that, so far as it affected charities, by taxing their stationery or anything else, they would have expected to bear that additional impost.
The arrangements for charities are rather special. I am now responding to the right hon. Gentleman's question. Discussions on their administrative arrangements have reached a first stage which is not unsatisfactory to the charities. But it is a first stage and we naturally want to see how it progresses. I do not want to go as far as the right hon. Gentleman asked me to go. I will not say that, in any case where a charity can demonstrate hardship, we will immediately make a repayment, but we will keep this machinery under review, and where we find that it is not working satisfactorily and could be improved without unnecessary and disproportionate labour for the Civil Service and the Departments concerned, we will gladly do our best to expedite repayment.
We do not want charities to be unnecessarily kept from their money. Having regard to the debate just ended, it is very much our desire that we should avoid that kind of addition to the Civil Service and the administrative machine which is disproportionately expensive to the benefit incurred.
I am sure that we can discuss charities objectively. All charities are worth every kind of effort and support. I am sure that every hon. Member does his best and


has his pet charity on several. However, those who look at the Register of Charities would find some odd titles.
A charity is often hard up and was hard up before Selective Employment Tax was thought of, so I could not go so far as to make promises whatever the charity and whatever its objects and however it carried out its business. There is nothing to prevent a charity spending a disproportionate amount of its money on collecting and distributing the charitable benefit—some spend more than others and some spend too much—and still retain their charitable status. They could incur a disproportionate amount in overhead expenses. What we were saying on the previous Amendment was that we want to do everything we can to discourage unnecessary overhead expenses and use of labour.
I would not go beyond what I have said, but I hope that it is sufficient to indicate that we are only too happy to look at the matter sympathetically and see how it develops. This is why we should not accept the new Clause. The cost would not be enormous—about £400,000—and it is not on that basis that I rest my case. It would be difficult administratively because the interest on every repayment would have to be calculated for a curious period. A substantial number of qualified households would not be taken into account anyway with this speeding-up of repayment, because of the reduction in the Clause.
I hope that it will therefore be felt that there is no change of plan in this respect. It is an essential part of keeping down inflationary pressure. It is not part of our procedure to pay interest on taxes. When there is a refund of tax, we do not pay interest in the ordinary way. We never have done, nor did the Government of the party opposite. I hope that the Opposition will not press the new Clause.

Mr. Patrick Jenkin: The Chief Secretary exuded sympathy with his characteristic suavity, but gave us virtually nothing else. His answer can only be regarded not only by my hon. Friends, but by people generally, as highly unsatisfactory.
The right hon. Gentleman argued that the Chancellor of the Exchequer intended

to use this forced loan, which is what it is, as an instrument of credit control. His quotations from the Chancellor's speech were wholly unconvincing. It is obvious that this whole idea was miles from the Chancellor's thoughts at that time. If it was regarded as part of the pattern of control of credit and demand, it should have been relevant only in so far as taxpayers would be bearing the tax. S.E.T. will hit a large number of firms, organisations and activities in respect of which there will be no question of repayment or premium.
The fact that the tax becomes payable by them in October is surely the matter to which the Chancellor was referring in, for example, his remarks on 3rd May, when he said:
The scheme will produce an easing in home demand this year…"—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1458.]
A great many taxpayers will pay this tax and will not get anything back. Any reasonable person listening to the Chancellor making his statement must surely have believed that to be the position—that the extent to which home demand would be eased this year would be the extent of those who would bear the tax.
Is the Chief Secretary still trying to convince the House that the Chancellor solemnly sat down and drew a diagram of the extent to which he was going to take demand out of the economy? Whatever he did, we know that he was wrong. He has admitted it, and the measures of 20th July proved that to be so. But even at the end of April, when the Chancellor was drafting his Budget strategy, did he sit down, draw a diagram and then say, "At the beginning of October we will have to take £X million out of the economy and then, at the end of February, we will pay £160 million of it back and this will just about match the pattern of demand"?
Does the Chief Secretary still maintain that that is what the Chancellor did, for that is the logic of the right hon. Gentleman's argument? If that is what the Chancellor was doing, why was it suddenly decided later, on 20th July, that the pattern of demand would be different and that he would be able to make these refunds and premiums eight weeks earlier than he had originally thought would be possible? It passes comprehension that the


Chancellor was consciously and deliberately using this crazy pattern of taking millions of pounds in and then paying millions of pounds out again as an instrument of credit control.

Mr. Diamond: Not only was that so, but my right hon. Friend the Chancellor and I have said it on many occasions. I said it in my speech in the Budget debate. I made it clear that one of the justifications for this tax was that it was not thought at that time that there would be need to reduce demand in the early part of the fiscal year but that the need would arise in the Autumn. That has been said many times.
The quotation I made from my right hon. Friend's speech of 3rd May is specific. He said:
The scheme will produce an easing in home demand this year.…"—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1458.]
What the hon. Gentleman is saying would have been satisfied if my right hon. Friend had simply said, "The scheme will produce an easing in home demand." However, he added the words, "this year".

Mr. Jenkin: I appreciate that the Chancellor was saying that one advantage of this form of tax was that it would be levied quickly and raise revenue quickly, whereas other forms of taxation—Income Tax and certainly Surtax; as we know, the surcharge on Surtax which the Prime Minister announced on 20th July will mean that it will have no effect until September of next year—would be slow to take effect, and the Chancellor claimed that it would, therefore, have a deflationary effect this year.
I do not believe that the Chief Secretary hopes to gain credibility for his statement that this was a deliberate and consciously thought out pattern of control of credit from the very beginning, because that argument is not credible. I draw the right hon. Gentleman's attention to an article by Lombard in yesterday's Financial Times. It stated:
… it reflects nothing but discredit on the Government that it hadn't the wit to devise a scheme for preventing manufacturing industry being exposed to embarrassment on this account and has since sought to turn that failure to account for tightening up the credit squeeze, knowing that this must be a highly unsatisfactory method of achieving that result.

Later, the article stated:
… the afterthought decision to turn it to account for this purpose is far less clever than the authorities have evidently seen it.
That is what that responsible financial newspaper thinks of the right hon. Gentleman's argument. As I said, it is beyond the bounds of credibility that anybody could seriously believe that that is the reason why we face this situation. In fact, we all know the reason. It is that S.E.T. was a last-minute thought, scraped up out of desperation and introduced by the Chancellor before any of its ramifications and administration had been fully thought out, with the result that we are having to deal with it in two separate Bills, one to raise the tax and the other to pay it back.
The reason for the forced loan is simply because its repayments administration could not be put into operation in time. I cannot believe that anybody seriously thinks that if that administration could have been done in time, it would not have been put into effect—that, is supposing, miraculously, that the Ministry of Labour would have been ready in October.
I quote from a letter which I have received from a constituent. Speaking of charities, the writer, a lady, states:
… it is an immense relief now that the charities are to be excluded from the effect of the tax…but, my hat, of all the ingenious methods of raising an interest-free loan ! I've been hoping all my life for just such a brilliant idea. Perhaps, after all, the Chancellor has some of the qualifications for his office?
This tax is intended to have an impact on some service industries and others in similar categories, yet not on other industries. We regard this as a futile and damaging discrimination which will penalise those very people whom the Chancellor was hoping and intending to exempt.
My hon. Friend the Member for Finchley (Mrs. Thatcher) dealt with the two broad categories, industry and what one might call the hardship cases—qualified households and charities. The figures given by the Chief Secretary—£3,500 million of liquid assets—were misleading. This forced loan is bound to be an attack on a company's liquidity. It is bound to result—if firms are able to raise money in this way—in companies having to increase their overdrafts, if they are lucky


to have them, or run their bank credit right down. The only alternative way for a company to pay this forced loan is by reducing its stocks or work in progress.
Whichever way one looks at it, the £160 million will represent a reduction in the margin of stocks or work in progress and will cause considerable difficulties. The Financial Times made this point when it stated:
… the displacement of liquidity the industrial system will be experiencing in the months ahead could impose an intolerable strain on the finances of the more vulnerable companies …
It is important for the Chief Secretary to bear those words, "intolerable strain", in mind.
This is nothing less than the truth. Smaller companies, which have not the resources and are already working to the bone with their stocks, overdrafts and work in progress, are the firms that will find it extremely hard to meet the tax. What are they to do? If they have investment plans, they can postpone them—and the Chief Secretary may say that although this is a bad thing, it might not be as bad as some other things. Another way will be to postpone the payment of any other tax that is due, such as Corporation Tax or Schedule F Income Tax. They will just hang on to the money and wait for the second, third and final demands, and the result will be that the Revenue will get no extra money at all. Ways should have been found round this situation.
8.0 p.m.
One thing that the Government can do, and what the Clause asks them to do, is to recognise that there is this hardship. Small companies will have to borrow at 8 per cent. to meet some of the extra costs incurred. They will not only have interest payments, but will incur costs in meeting the tax either by running down stocks and then replenishing them, or reducing the rate at which they are liquidating their overdrafts. All these methods will incur extra cost, and the interest rate of 4 per cent. proposed in the new Clause is not unreasonable.
Companies may find that the only way in which they can pay this tax is by taking part in the shake-out and reducing the number of their employees. Many people will qualify for redundancy payment.

Most of that—three-quarters—will come from the Redundancy Payments Fund, but companies still have to meet a substantial slice of the payment, and this will be an extra cost incurred at exactly the time when the S.E.T. comes on them. This will impose an intolerable strain on many companies, and it is outrageous that the Government should have imposed it on them on top of everything else.
On the charities aspect, Dr. Barnardo's will have to pay £110,000. In the first three months, that will be about £30,000. The interest on that amount of overdraft will be £2,400 for the three months, and Dr. Barnardo's will lose that very substantial sum for ever. It will eventually get back the tax, but the cost of the interest on its borrowing meantime is lost for ever.
The Chief Secretary argues that charities are really flush on 1st January, but the period really starts in October, and builds up during November and December. It is in December, the pre-Christmas period, that charities usually make their maximum payments to many beneficiaries, but that is just when they will be hit hardest.
I had hoped that the Chief Secretary would have been much more forthcoming. When I see the crocodile tears that the Government shed over charities my mind always goes back to the 1947 Finance Act, and Dr. Dalton's anti-charity legislation, which struck charities the hardest blow they had ever known by ceasing to make charitable subscriptions a deduction for Surtax payments.
The right hon. Gentleman gave some hope of sheltering the shorn lamb from the wind with regard to qualifying households. The sums are not large. If one has an elderly housekeeper, the amount to be raised is probably not much over the £10 figure appearing in the Clause but, even so, the interest on that sum will amount to about £1 which, in some households, could represent a hardship which it would be quite unreasonable to impose on them, having regard to the fact that these people are not intended to be hit by the tax at all. The arguments in favour of the Treasury meeting some part of the costs inputted by making this forced loan to the Government are quite overwhelming, but the Chief Secretary has gone


practically no way at all towards meeting it.

Mr. J. Bruce-Gardyne: I had not intended to intervene in this debate, but the Chief Secretary has provoked me into doing so. I found his argument remarkable. It was the lame argument that the purpose of the tax, as had always been emphasised from the time of the Budget Statement, was to achieve an easing in home demand this year and that, as a result, he did not feel able to accept the new Clause.
We are asked to believe that when the Chancellor of the Exchequer made his Budget Statement at the beginning of May he had a sort of wall graph in his mind which said, "May, June, July, August—demand down. September, October, November, December—demand up. January, February, March—demand down." We know that the right hon. Gentleman's economic forecast was nonsense, as we all said at the time, but it is stretching our belief in the Chancellor's stategy a little far to expect us to accept that he had this pattern of fluctuating demand in his mind then, that that was why he devised the forced loan, that it was not an unexpected blow, and that, as a result, the Chief Secretary could not accept the new Clause.
That is not true, and the right hon. Gentleman knows perfectly well that it is not true——

Mr. Diamond: The hon. Gentleman is as courteous as ever in saying that it is not true, and that I know that it is not true. I do not want to bandy words, but the hon. Gentleman is probably still capable of reading and perhaps he would read my right hon. Friend's Budget speech, my own Budget speech, my right hon. Friend's repeated statements about pre-Budget buying and the expectation, therefore, that demand would be considerably lessened after that.[Interruption.] The challenge is whether, in May, when my right hon. Friend introduced his Budget, he was introducing it on the assumption that there would be need for a reduction in demand of the kind and over the period that this tax would supply.

Mr. Bruce-Gardyne: We recognise that the Chancellor of the Exchequer thought that there would be this dip in demand in May, June, July and August. We know that he was wrong—we said so at

the time—but we accept that that is what he thought. The Chief Secretary shakes his head, but we told the Chancellor of the Exchequer at the time that he was wrong. But our credulity is stretched too far when we are asked to believe that, having forecast this imaginary dip in demand, the Chancellor of the Exchequer foresaw a further rise in demand in the autumn, and another dip in demand in the spring of 1967. That would be the only logic to justify the Chief Secretary's argument, but it is stretching our credulity too far.
The Chief Secretary said that the position would be quite splendid for charities because their peak income moment was immediately after the New Year. That is true, but is the right hon. Gentleman suggesting that charities should delay payment from the autumn until the beginning of January? He himself has said that that would be breaking the law, but that is the only logic of his suggestion that charities will be all right because they get their peak income at the beginning of the new year.
I agree entirely with my hon. Friend the Member for Ormskirk (Sir D. Glover) that this Clause is too modest in scale; 4 per cent. is too modest an interest to expect the Government to pay for the forced loan they are extracting from manufacturing and construction industry and also from farming and the fishing industry. The Chief Secretary gave us some glorious and, as my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) pointed out, largely meaningless figures about company liquidity. I draw the right hon. Gentleman's attention to a couple of specific examples which were explained to some of my hon. Friends and me by two big manufacturing firms in Glasgow, not long ago.
One was a large engineering firm which calculated that over the period the forced loan would cost it approximately £100,000. This discussion took place before the Chancellor announced the reversal of his policy and when we discussed how the firm would finance the forced loan it was said that it would have to borrow from the bank. It was not up against its overdraft limits. It may still be fortunate enough to be able to borrow, but under the new dispensation it may not be fortunate enough. The loan


it will have to pay over to the Government will cost something in the nature of £2,600 during the period.
A firm such as this will not shake out employment, in the Prime Minister's eloquent phrase, in order to reduce its liability to the forced loan because it will not get the money back afterwards. This was not what the Chancellor and the Goverment wanted. Therefore, the firm will be faced with this financial burden. It does not seem unreasonable that in compensation the firm should get 4 per cent. in interest on the money it is lending to the Government.
The other firm we visited on the same occasion was a shipbuilding firm. In that case, the forced loan would come to about £150,000. That firm was up against the overdraft limit and had no way of finding how to meet the charge. It seemed to take the attitude that clearly it could not meet the charge and, therefore, presumably, the Chancellor, the Almighty, someone would dispense with it, but if that were not done the firm would be forced into liquidation.

Mr. Diamond: I am not making any suggestions about credibility, but following the figures carefully, I see that this tax works out at about one week's wages. The hon. Member gave the first example of £100,000. Interest on that is one week's wages. In the other case, he spoke of £2,500, which is 2½ per cent. If the same figures apply in the second case the hon. Member is saying that the firm would go into liquidation because it is short of 2½ per cent. on one week's wages.

8.15 p.m.

Mr. Bruce-Gardyne: That is not what I said. The Chief Secretary clearly did not understand the case I was making. I was saying that in the case of the second firm it had to find a forced loan of £150,000. It was already at the overdraft limit and could not see from where it could borrow the £150,000.
I would not deny that it may have been exaggerating in saying that it would be forced into liquidation, but that is what was said. I would not say that this would necessarily be the case, but it certainly

would be forced into a very substantial shake-out of employment of a type which I do not believe the Government want. I do not suggest that the payment of a small interest charge by the Government would save the company from this dilemma, but at least it would be a small contribution of assistance.

Sir D. Glover: Perhaps the payment of interest would not stop the firm from going into liquidation because probably it could not get the £150,000 from the bank and would have to borrow privately at a much higher rate of interest, which would not ease the strain.

Mr. Bruce-Gardyne: My hon. Friend is quite right. If the firm could borrow privately that would not ease the strain.
There is a further argument which has not been made and one which perhaps the Chief Secretary may not like. After our experience in previous weeks it seems that we are entitled to wonder whether the rebates will be paid when the Government say that they will be. We have been told a great many things in recent weeks and months by hon. Members opposite and practically always they have done the opposite. Suppose that in the spring next year we face—heaven forbid, but it would not come as a surprise to me—a continuing situation of intense strain on the balance of payments. Are we then suddenly to find that it is not opportune for the Government to pay the premiums or the rebates, that there will be a delaying proposal put before us and perhaps rushed through in Committee upstairs?
This Clause would at least give manufacturing and construction industry, farming and the fishing industry some assurance of compensation if this position developed. I trust that it will not. The Chief Secretary looks shocked that I should suggest it, but when he thinks of the actions of the Government over the last few weeks he should not be surprised. For all these reasons my only regret is that in proposing the Clause my hon. Friend did not push the interest rate which should be charged to the Government higher. I have the greatest enthusiasm in supporting the Clause.

Question put, That the Clause be read the Second time:—

The House divided: Ayes 172, Noes 253.

Division No. 158.]
AYES
[8.18 p.m.


Alison, Michael (Barkston Ash)
Grimond, Rt. Hn. J.
Onslow, Cranley


Allason, James (Hemel Hempstead)
Gurden, Harold
Orr-Ewing, Sir Ian


Awdry, Daniel
Hall-Davis, A. G. F.
Osborn, John (Hallam)


Baker, W. H. K.
Hamilton, Michael (Salisbury)
Osborne, Sir Cyril (Louth)


Batsford, Brian
Harris, Reader (Heston)
Page, John (Harrow, W.)


Beamish, Col. Sir Tufton
Harrison, Brian (Maldon)
Pearson, Sir Frank (Clitheroe)


Bessell, Peter
Harrison, Col. Sir Harwood (Eye)
Peel, John


Biffen, John
Harvey, Sir Arthur Vere
Percival, Ian


Birch, Rt. Hn. Nigel
Heald, Rt. Hn. Sir Lionel
Pike, Miss Mervyn


Black, Sir Cyril
Heseltine, Michael
Pink, R. Bonner


Blaker, Peter
Hiley, Joseph
Pounder, Rafton


Body, Richard
Hill, J. E. B.
Powell, Rt. Hn. J. Enoch


Bossom, Sir Clive
Hobson, Rt. Hn. Sir John
Price, David (Eastleigh)


Boyd-Carpenter, Rt. Hn. John
Holland, Philip
Prior, J. M. L.


Boyle, Rt. Hn. Sir Edward
Hordern, Peter
Pym, Francis


Braine, Bernard
Hornby, Richard
Quennell, Miss J. M.


Brinton, Sir Tatton
Howell, David (Guildford)
Rawlinson, Rt. Hon. Sir Peter


Brown, Sir Edward (Bath)
Hunt, John
Rees-Davies, W. R.


Bruce-Gardyne, J.
Hutchison, Michael Clark
Renton, Rt. Hn. Sir David


Buchanan-Smith, Alick (Angus, N&amp;M)
Irvine, Bryant Godman (Rye)
Ridley, Hn. Nicholas


Buck, Antony (Colchester)
Jenkin, Patrick (Woodford)
Rossi, Hugh (Hornsey)


Bullus, Sir Eric
Jones, Arthur (Northants, S.)
Russell, Sir Ronald


Campbell, Gordon
Jopling, Michael
St. John-Stevas, Norman


Carlisle, Mark
Joseph, Rt. Hn. Sir Keith
Scott, Nicholas


Carr, Rt. Hn. Robert
Kaberry, Sir Donald
Sharples, Richard


Cary, Sir Robert
Kershaw, Anthony
Shaw, Michael (Sc'b'gh &amp; Whitby)


Clark, Henry
Kimball, Marcus
Sinclair, Sir George


Clegg, Walter
Kirk, Peter
Stainton, Keith


Cordle, John
Knight, Mrs. Jill
Steel, David (Roxburgh)


Corfield, F. V.
Lancaster, Col. C. G.
Stodart, Anthony


Costain, A. P.
Langford-Holt, Sir John
Stoddart-Scott, Col. Sir M. (Ripon)


Craddock, Sir Beresford (Spelthorne)
Lewis, Kenneth (Rutland)
Summers, Sir Spencer


Cunningham, Sir Knox
Lloyd, Rt. Hn. Selwyn (Wirral)
Talbot, John E.


Currie, G. B. H.
Longden, Gilbert
Tapsell, Peter


Dance, James
Loveys, W. H.
Taylor, Edward M.(G'gow, Cathcart)


Davidson, James (Aberdeenshire, W.)
Lubbock, Eric
Teeling, Sir William


Dean, Paul (Somerset, N.)
McAdden, Sir Stephen
Temple, John M.


Deedes, Rt. Hn. W. F. (Ashford)
MacArthur, Ian
Thatcher, Mrs. Margaret


Dodds-Parker, Douglas
Macleod, Rt. Hn. Iain
Turton, Rt. Hn. R. H.


Doughty, Charles
McMaster, Stanley
van Straubenzee, W. R.


Douglas-Home, Rt. Hn. Sir Alec
Maddan, Martin
Vaughan-Morgan, Rt. Hn. Sir John


Eden, Sir John
Maginnis, John E.
Vickers, Dame Joan


Evans, Gwynfor (C'marthen)
Marten, Neil
Wainwright, Richard (Colne Valley)


Eyre, Reginald
Maude, Angus
Walker, Peter (Worcester)


Farr, John
Mawby, Ray
Ward, Dame Irene


Fisher, Nigel
Maxwell-Hyslop, R. J.
Weatherill, Bernard


Fletcher-Cooke, Charles
Maydon, Lt.-Cmdr. S. L. C
Webster, David


Fortescue, Tim
Mills, Peter (Torrington)
Wells, John (Maidstone)


Foster, Sir John
Miscampbell, Norman
Whitelaw, William


Gibson-Watt, David
Mitchell, David (Basingstoke)
Wills, Sir Gerald (Bridgwater)


Giles, Rear-Adm. Morgan
Monro, Hector
Wilson, Geoffrey (Truro)


Gilmour, Sir John (Fife, E.)
More, Jasper
Winstanley, Dr. M. P.


Glover, Sir Douglas
Morgan, W. G. (Denbigh)
Wolrige-Gordon, Patrick


Godber, Rt. Hn. J. B.
Morrison, Charles (Devizes)
Wood, Rt. Hn. Richard


Goodhart, Philip
Mott-Radclyffe, Sir Charles
Wylie, N. R.


Gower, Raymond
Murton, Oscar
Younger, Hn. George


Gresham Cooke, R.
Nabarro, Sir Gerald



Griffiths, Eldon (Bury St. Edmunds)
Noble, Rt. Hn. Michael
TELLERS FOR THE AYES:




Mr. R. W. Elliott and Mr. Grant.




NOES


Abse, Leo
Bonce, Cyrll
Bradley, Tom


Albu, Austen
Bonn, Rt. Hn. Anthony Wedgwood
Bray, Dr. Jeremy


Alldritt, Walter
Bennett, James (G'gow, Brdigeton)
Brooks, Edwin


Allen, Scholefield
Bidwell, Sydney
Broughton, Dr. A. D. D.


Anderson, Donald
Binns, John
Brown, Rt. Hn. George (Belper)


Archer, Peter
Bishop, E. S.
Brown, Hugh D. (G'gow, Provan)


Armstrong, Ernest
Blackburn, F,
Brown, Bob (N'c'tle-upon-Tyne, W)


Ashley, Jack
Blenkinsop, Arthur
Brown, R. W. (Shoreditch &amp; F'bury)


Atkins, Ronald (Preston, N.)
Boardman, H.
Buchan, Norman


Atkinson, Norman (Tottenham)
Booth, Albert
Butler, Herbert (Hackney, C.)


Bacon, Rt. Hn. Alice
Boston, Terence
Cant, R. B.


Bagier, Gordon A. T.
Bottomley, Rt. Hn. Arthur
Carmichael, Neil


Bames, Michael
Bowden, Rt. Hn. Herbert
Castle, Rt. Hn. Barbara


Barnett, Joel
Boyden, James
Coe, Denis


Beaney, Alan
Braddock, Mrs. E. M,
Coleman, Donald




Concannon, J. D.
Howarth, Robert (Bolton, E.)
Parker, John (Dagenham)


Conlan, Bernard
Howie, W.
Parkyn, Brian (Bedford)


Corbet, Mrs. Freda
Hughes, Emrys (Ayrshire, S.)
Pearson, Arthur (Pontypridd)


Cousins, Rt. Hn, Frank
Hughes, Hector (Aberdeen, N.)
Peart, Rt. Hn. Fred


Craddock, George (Bradford, S.)
Hughes, Roy (Newport)
Pentland, Norman


Crawshaw, Richard
Hunter, Adam
Perry, Ernest G. (Battersea, S.)


Crosland, Rt. Hn. Anthony
Hynd, John
Perry, George H. (Nottingham, S.)


Crossman, Rt. Hn. Richard
Jackson, Peter M. (High Peak)
Price, Christopher (Perry Barr)


Cullen, Mrs. Alice
Janner, Sir Barnett
Price, Thomas (Westhoughton)


Davidson, Arthur (Accrington)
Jay, Rt. Hn. Douglas
Price, William (Rugby)


Davies, Or. Ernest (Stretford)
Jeger, George (Goole)
Probert, Arthur


Davies, G. Elfed (Rhondda, E.)
Jeger, Mrs. Lena (H'b'n&amp;St. P'cras, S.)
Pursey, Cmdr. Harry


Davies, Ednyfed Hudson (Conway)
Jenkins, Hugh (Putney)
Rankin, John


Davies, Harold (Leek)
Jenkins, Rt. Hn. Roy (Stechford)
Redhead, Edward


Davies, Ifor (Gower)
Johnson, Carol (Lewisham, S.)
Rees, Merlyn


Davies, Robert (Cambridge)
Jones, Dan (Burnley)
Rhodes, Geoffrey


Dell, Edmund
Jones, J. Idwal (Wrexham)
Richard, Ivor


Dewar, Donald
Judd, Frank
Roberts, Gwilym (Bedfordshire, S.)


Diamond, Rt. Hn. John
Kenyon, Clifford
Robinson, Rt. Hn. Kenneth (St. P'c' as)


Dobson, Ray
Lawson, George
Rodgers, William (Stockton)


Doig, Peter
Leadbitter, Ted
Roebuck, Roy


Driberg, Tom
Ledger, Ron
Rose, Paul


Dunn, James A.
Lee, John (Reading)
Ross, Rt. Hn. William


Durmett, Jack
Lestor, Miss Joan
Rowland, Christopher (Merlden)


Dunwoody, Mrs. Gwyneth (Exeter)
Lever, L. M. (Ardwick)
Rowlands, E. (Cardiff, N.)


Eadie, Alex
Lewis, Ron (Carlisle)
Ryan, John


Edwards, William (Merioneth)
Lomas, Kenneth
Sheldon, Robert


Ellis, John
Loughlin, Charles
Shinwell, Rt. Hn. E.


English, Michael
Luard, Evan
Shore, Peter (Stepney)


Ensor, David
Lyon, Alexander W. (York)
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Faulds, Andrew
Lyons, Edward (Bradford, E.)
Short, Mrs. Renée (W'hampton, N. E.)


Fernyhough, E.
McBride, Neil
Silkin, John (Deptford)


Finch, Harold
MacColl, James
Silkin, S. C. (Dulwich)


Fitch, Alan (Wigan)
MacDermot, Niall
Silverman, Sydney (Nelson)


Floud, Bernard
Macdonald, A. H.
Slater, Joseph


Foley, Maurice
McGuire, Michael
Small, William


Foot, Michael (Ebbw Vale)
McKay, Mrs. Margaret
Snow, Julian


Ford, Ben
Mackenzie, Gregor (Rutherglen)
Spriggs, Leslie


Forrester, John
Mackie, John
Steele, Thomas (Dunbartonshire, W.)


Fowler, Gerry
Maclennan, Robert
Stewart, Rt. Hn. Michael


Fraser, John (Norwood)
McMillan, Tom (Glasgow, C.)
Summerskill, Hn. Dr. Shirley


Fraser, Rt. Hn. Tom (Hamilton)
McNamara, J. Kevin
Swain, Thomas


Freeson, Reginald
MacPherson, Malcolm
Symonds, J. B.


Gardner, A. J.
Mahon, Peter (Preston, S.)
Taverne, Dick


Garrett, W. E.
Manuel, Archie
Thomas, Iorwerth (Rhondda, W.)


Garrow, Alex
Mapp, Charles
Thornton, Ernest


Ginsburg, David
Marquand, David
Tinn, James


Gourlay, Harry
Marsh, Rt. Hn. Richard
Tuck, Raphael


Gray, Dr. Hugh (Yarmouth)
Mason, Roy
Varley, Eric G.


Greenwood, Rt. Hn. Anthony
Mayhew, Christopher
Wainwright, Edwin (Dearne Valley)


Gregory, Arnold
Mellish, Robert
Wallace, George


Grey, Charles (Durham)
Millan, Bruce
Watkins, David (Consett)


Griffiths, David (Rother Valley)
Miller, Dr. M. S.
Weitzman, David


Griffiths, Rt. Hn. James (Llanelly)
Mitchell, R. C. (S'th'pton, Test)
White, Mrs. Elrene


Gunter, Rt. Hn. R. J.
Molloy, William
Whitlock, William


Hamilton, James (Bothwell)
Morgan, Elystan (Cardiganshire)
Wigg, Rt. Hn. George


Hamilton, William (Fife, W.)
Morris, Charles R. (Openshaw)
Willey, Rt. Hn. Frederick


Harmling, William
Moyle, Roland
Williams, Alan (Swansea, W.)


Hannan, William
Murray, Albert
Williams, Alan Lee (Hornchurch)


Harrison, Walter (Wakefield)
Neal, Harold
Williams, Clifford (Abertillery)


Hart, Mrs. Judith
Norwood, Christopher
Williams, Mrs. Shirley (Hitchin)


Haseldine, Norman
Oakes, Gordon
Williams, W. T. (Warrington)


Hattersley, Roy
Ogden, Eric
Willis, George (Edinburgh, E.)


Hazell, Bert
O'Malley, Brian
Wilson, William (Coventry, S.)


Henig, Stanley
Orbach, Maurice
Winnick, David


Herbison, Rt. Hn. Margaret
Orme, Stanley
Winterbottom, R. E.


Hooley, Frank
Oswald, Thomas
Wyatt, Woodrow


Horner, John
Page, Derek (King's Lynn)
Yates, Victor


Houghton, Rt. Hn. Douglas
Pannell, Rt. Hn. Charles



Howarth, Harry (Wellingborough)
Park, Trevor
TELLERS FOR THE NOES:




Mr. Ioan L. Evans and Mr. Harper.

New Clause.—(FLUCTUATION CLAUSE.)

Where any contract for the carrying out of works or the supply of goods or services has been entered into prior to 23rd June, 1966 and contains any provision for the contract price to be varied by reason of alteration in costs or in any rate or tax or imposition other than selective employment tax then the provisions

of section 42 of the Finance Act 1966 shall be deemed to be such an alteration as aforesaid and the contract price shall be varied in accordance with the contract or as near thereto as the circumstances allow to the extent that a refund of selective employment tax is not paid or payable under this Act.—[Sir J. Hobson.]

Brought up, and read the First time.

Sir J. Hobson: I beg to move, That the Clause be read a Second time.
The Clause seeks to deal with a problem which will arise from the imposition of the tax. One or other of two parties to a contract will have to bear the burden of the tax which falls upon employed persons. This goes over the whole field of contracts. It particularly affects the construction industry, which is not to get any refund. It affects electrical contractors. It affects all other people with a staff and who have made long-term contracts by which they are bound and who are not entitled to any refund.
What is the fair and equitable way of dealing with a situation which the Government have created and which neither of the parties to a contract could have foreseen? The electrical contracting industry provides an example of the effect that this will have. Electrical installations firms belonging to their association carry out about £150 million worth of installation work each year, much of it on fixed-price contracts running for up to two years and in some cases five years. The previous Government, this Government and the local authorities have been increasingly trying to secure that people tender for work upon the basis of fixed-price contracts, to give them the economic stimulus of making a profit out of the fixed price and not upon a cost-plus basis, when it does not matter how efficient they are.
8.30 p.m.
A contractor whose fixed-price tender was accepted before the Chancellor's announcement must pay the tax from September, with no chance of recouping the additional expenditure, which he could not have allowed for when he tendered. On present figures, the tax will increase the industry's labour costs by about 10 per cent. and reduce profits to one-third of their present level. The effect in other industries is likely to depend on the extent to which the long-term contracts they enter into contain a higher or lower proportion of labour cost in their costing element. The contractors' liquid capital will be depreciated with no chance of recouping the additional outlay. At the same time, in electrical contracting the electricity boards will be operating in direct competition with the private firms on existing contracts on which the boards will receive a refund and lose no finance.
That is a special case, but the matter goes much wider than that of these two principal industries and anybody who, before the announcement of the tax, entered into a long-term contract running over a period of more than six months is likely to be in a serious position.
How should one equitably deal with this? It seems to us—I do not say that it is right, for there are many different views—that a fair way is to say that if a man entered into a fixed-price contract making no provision for variations in cost he had assumed to himself the risks of future events, whether acts of God or of the Government, and that he should, therefore, bear the loss, however unfair it might be for the Government to impose it on him. As between him and the other party to the contract it was only fair that he should bear the burden of the tax.
But there may be many contracts intended to provide for future events in which it is specified that some form of rate or tax, some alteration in cost or some other imposition, should entitle the contractor to pass on the burden to the other party to the contract, but no such contract entered into before 23rd June, could have specified the Selective Employment Tax because nobody would have foreseen that such a tax would be imposed.
Therefore, it seems fair to us that if the contractor had given himself an escape clause by which he could pass on additional costs which were beyond his control, but he had not been able to specify the tax in his contract because he could not have foreseen that it would fall upon him, it would be fair to add, as it were, an interpretation clause so that he could say that, while he had not actually provided for it, his contract should be read upon the terms that it was specified, because he had tried to provide against such risks and should, therefore, be able to pass it on.
One of the great troubles is that this proposal was put down earlier in the form of an Amendment, but was guillotined and never discussed. This is the first opportunity we have had to discuss it, and we have about half an hour left to consider the most important and difficult principle of how the balance of equity between two innocent parties to a contract should be preserved, the


burden which the Government impose being distributed between them in the right way. There is no possibility of the Clause being taken away and being considered by the draftsmen. There is no chance of our having the advantage of the Government's own solution to this difficult problem.
The House is put in the thoroughly awkward position of either having to accept the Clause or doing nothing about it at all. I should be the last person to suggest that this is the ideal solution, but it is at least an attempt to deal with the very difficult predicament in which the Government have placed parties to contracts.

Mr. A. P. Costain: I support the new Clause, and in doing so I must, of course, declare my interest as a contractor.
A matter of great principle is involved there, the question being whether any Government can interpose between two contracting parties and put upon one of them a burden which he had no reason to expect when he prepared his tender. This is important enough, but when the Government themselves are parties to a contract, what right in equity or common law can they possibly have to impose upon the other party a penal sanction?
We are discussing this principle in the context of the tax as at present proposed, but the Chancellor has said that it is to operate at first for a trial period. We do not know what will come in the future. Income Tax started at a very low rate and on a yearly basis. When the Chancellor finds that his present proposals will not work, what will he add to the tax? It could be doubled or trebled. It could lead to the breaking of a number of companies. Is that what the Government want? In their plunge towards Socialism, which will lead to Communism, is this a trap designed to lead to the breaking of ordinary private enterprise concerns? If they want a more efficient way of doing it, I cannot suggest one; there could be no better way of breaking a firm, particularly the small firm.
My right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hobson) has explained the difficulties in preparing a Clause of this

kind. But the principle behind it is clear. We ask for equity between the two parties. If the Government oppose the Clause—I cannot think why they should—it is up to them to introduce something on similar lines which, in their view, would be a better piece of drafting. It would be utterly wrong if the House of Commons were to accept that the Government or any parties to a contract could unilaterally alter the contract to their own benefit and to the detriment of those on the other side who show enterprise in entering into the contract.
This must of necessity be a short debate. Although I have put my point briefly, I want it to be understood as of vital importance to the whole future of the contracting industries. I refer not only to building contracting but to contracting as a whole. If we accept that any Government could impose taxation in this way at their own will, when and how they like, the whole basis of private enterprise must in the end perish.

Mr. Gower: Like my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), I have to declare an interest in this matter, because I, too, am a director of a constructional engineering company. I agree with my hon. Friend that there is here a matter of what he called a great principle; I think it goes as far as that. It is certainly one of major importance to contracting companies of all kinds. It is possible, of course, that the Government may plead against our case that any person who enters into a fixed-price contract might be deemed to foresee the possibility of future increases in taxation. I suspect the Government may invoke that kind of argument and in that respect they might plead the fact that Income Tax can be raised, that Corporation Tax can be increased and that the taxation of materials used in contracts can also increase, putting up the price. But I would respectfully submit that tax increases of those kinds are different from that which we are now considering.
For example, if the Corporation Tax were increased it would affect the whole gamut of companies, and if Income Tax were increased it would affect the whole range of persons who pay personal Income Tax. Similarly, if the cost of certain materials rose; sometimes there are clauses which provide some help in


that respect, and certainly if the cost of labour goes up, as my hon. Friend knows, there are clauses which enable adjustments to be made. But here we have an almost unique kind of tax, one under which arrangements are made for the repayment or refund of tax to some categories of persons while in other cases premium payments are to be made to some kinds of manufacturers; and we have only a limited body subject to the full ravages of this particular tax.
Unfortunately, many of us regard contractors and builders as creative persons after the same genre as manufacturers, and it is extraordinary to me that they should be treated as service industries or something within that category, because they have created as much of the wealth of this country in some spheres, and certainly we know the contribution of contractors to our overseas exports is not negligible.
My hon. Friend the Member for Folkestone and Hythe is associated with subsidiary companies which have done a magnificent job in different parts of the world, including Australia and the Continent of Africa, and it is extraordinary to me that they should be placed in this unsatisfactory predicament by this part of the Bill. We want to protect them from the worst ravages, because we think it is wholly indefensible for this hardship to be imposed in this way. What is more, the tax not only affects some in a small category, but we find that in some cases some of their competitors, as in the electricity contracting industry, the Electricity Boards, are not treated in the same way, so that the full burden of this tax really falls on comparatively few shoulders. It is an extraordinary state of affairs.
The best solution would have been an arrangement by which these people could have been treated as manufacturers. But we have not got that solution so as my hon. and learned Friend has pointed out, we have had to improvise another kind of solution. I believe with all its imperfections it would at least do something to remedy the manifest injustice of the Clause as it stands—because who in his right senses would enter into a fixed-price contract if he knew he would be prejudiced in this way by legislation brought in shortly afterwards? In the absence of a proper arrangement to give

them a premium, there could have been transitional arrangements which would have enabled those who had entered into contracts immediately or shortly before, or within a limited time before, the publication of the Bill to work them out, but such arrangements are lacking.
8.45 p.m.
It will be infamous if the Government are not prepared to make any sort of concession. Some of the smaller contractors work on extremely narrow margins and even with that without impositions of this kind, it is sometimes a very delicate operation to meet a price. Our climate is so uncertain and all the circumstances of engineering and building in this country are so uncertain that these factors often make the difference between doing a job economically and at the contract price and making a small profit and suffering a financial loss and possibly liquidation or bankruptcy very fine. This could be what would tip the scale towards liquidation and bankruptcy for some quite reputable companies who have been in business for a long time. It could be the final straw which will break this camel's back and I implore the Chief Secretary to consider the new Clause in that light.

Mr. John E. Talbot: I am not connected with the contracting industry, but as a company lawyer I am interested in how these provisions in the Bill are to work, for I believe that they will create a great deal of hardship. We do not want to discourage the principle of making firm contracts for the supply of goods and services. It is to the advantage of both sides to such a contract that there should be a measure of stability. But if the Government are suddenly to produce a new tax—and heaven knows we are not at the end of the road yet and that further new taxes may be invented by their Hungarian ingenuity—how can anybody assume the risk of taking a firm contractual line over a period? To do so would be sheer economic suicide. In any stable economy it is essential that contractors and local authorities and others who have to deal with them should be able to plan ahead with a measure of stability and certainty.
I have had representations from my constituency from electrical contractors and others who will be in direct competition with the nationalised industries which


will get the refund while they will not. It is only a partial measure of justice to such contractors that the Government should accept the Clause. How can a man plan anything in any business without knowing something of what the future is to be?
It is not a parallel that Income Tax may go up and that Purchase Tax may go up and that other liabilities of that type may suddenly be imposed by Government action. Those are snags of which we are all well aware and when making contracts we certainly do not assume any reduction in taxation in the foreseeable future. But when the Government suddenly produce an entirely different tax, constituted on an entirely different idea, selective and attacking the unfavoured few and not the favoured many, it is only just to take account of such matters and to ensure that the loss does not fall on those few. Wages and prices are to be frozen and only rates and taxes are not to be frozen. The question before us is where that liability is to fall. In this case it is unjust to make it fall on the contractor and I hope that the Government will accept the new Clause.

Mr. Eric Lubbock: I would like to endorse what has been said so far, particularly by the right hon. and learned Gentleman the Member for Warwick and Leamington (Sir J. Hobson) in his introductory speech, when he said that it was wholly unsatisfactory for the House to have to deal with such an important matter as this within the confines of an extremely short debate. We shall have no time to consider what the Chief Secretary says in his reply and to come forward with fresh suggestions in the light of the reply.
This is a particularly unsatisfactory position because, as the right hon. and learned Gentleman said, when we come to some conclusion this evening, we cannot subsequently embody it in legislation because we have now reached Report and we are shortly to rise for the Summer Recess. If the Government have some alternative suggestions to make which will meet the points raised from this side of the House it will be impossible for them to give effect to them.
I have some reason to suppose that the Government are sympathetic to the

case put forward, because I have been studying a speech made by Mr. D. J Harrington, who is President of the Federation of Registered House-Builders. Mr. Harrington made the speech at a conference of house builders, called, I think, at the instigation of the Minister of Housing and Local Government to discuss the private house builders' problems. This conference took place on Tuesday, 2nd August. I would like to quote one paragraph from the speech of Mr. Harrington. He said:
The Ministers concerned have already accepted the justification for this tax being treated as an ex gratia recoverable cost in Government and local authority building contracts negotiated before the advent of the tax, and, furthermore, local authorities are being permitted to re-negotiate contract prices for housing contracts in those cases where such contract prices were submitted prior to the introduction of the tax and where the effect of the amount of such tax could not therefore have been included in the sum tendered.
In passing, I would like to declare an interest as a house builder in a very small way. It is the small house builders who are suffering most from the present economic situation, and I would commend Mr. Harrington's speech to the Chief Secretary, because it shows that this tax is the culmination of many serious difficulties which have been placed in the way of the small house builder. My point is that, if the Government have accepted this position, as Mr. Harrington says, they have seen that in the case of particular contracts the Government have to design a way in which contractors will not suffer from a tax which they could not possibly have envisaged when they entered into these arrangements. The Government are, therefore, in duty bound to accept the Clause or to suggest some other means of arriving at this particular objective.

Mr. Diamond: I thank the hon. Member for Orpington (Mr. Lubbock), who has deliberately curtailed his speech so that I could address the House. He was the third person to declare an interest as a contractor. Let me be the fourth and say that I was for a great number of years but am no longer, the financial director of a large firm of contractors and that I have some little knowledge of the problems and understand pretty well the way in which matters have been put. I had first better remind the House very


shortly of what my hon. Friend said when introducing his Budget.
Then he made it clear that it was not the intention of the Government that the whole of the cost of this tax should be passed on. Everyone recognises that there are two parties to a contract. One is called, for the sake of convenience in the civil engineering and building sphere, the contractor, and the other is the customer. What one has to do is to try to look sympathetically at both parties and see if a case has been made out. Except for the right hon. and learned Gentleman who dealt with this most fairly and put it forward as an admittedly difficult question, the case so far has been made out entirely from the point of view of the contractor in a technical sense.
First, it was said that the Government, as a matter of honour, should be reasonable about contracts into which they have entered having regard to the fact that they impose the taxes. I thought that we responded to that point fully. I draw attention to column 980 in HANSARD of 21st July where I gave the exact details of the way in which the Government proposed to deal with their own contracts. I said:
Departments may agree to pay up to 90 per cent. of the ascertained extra cost to the contractor resulting from his Selective Employment Tax payments in respect of personnel employed on the construction site only."—[OFFICIAL REPORT, 21st July, 1966; Vol. 732, c. 980–1.]
Different arguments were to apply to term contracts where Departments would be authorised to pay up to 100 per cent. of the extra cost. I made it clear that the contractor would recover about 75 per cent. of the increased cost of the tax. It is not the intention of the Government that any contractor should cover 100 per cent. of his increased costs.
The right hon. Member for Enfield, West (Mr. Iain Macleod) said that in his own banking firm as soon as the Budget was announced he and his co-directors sat down to consider how they could, by economies and greater efficiency, absorb as nearly as possible the whole tax. I am sure that that is what many businessmen have done. Therefore, it is obviously impossible for the Government to propose, never mind to legislate, to contractors or to the world at large that a fair arrangement would be for one party to a contract to pay to

the other 100 per cent. of the tax. In the majority of cases a firm may be completing a civil engineering or electrical contract for a firm which has to pay Selective Employment Tax. It would be wholly wrong for the Government and against their policy, to propose in any single case that 100 per cent. of the tax should be passed from one party to the contract to the other. The Government are acting in a very reasonable way regarding their own contracts. They are setting a course of conduct which they have deliberately said that they hoped local authorities and similar bodies would follow.
All that I can say about private contractors is that I take the right hon. Gentleman's point. He proposes this as an interpretation Clause to the variation clause. He starts on the basis that if a man enters into a fixed price contract he takes a gamble on what happens and acts accordingly in his costings. That is a proper, wise piece of business foresight—I do not want to use the word "gamble". It is a calculated risk. There is a great deal to be said for entering into contracts on that basis. It is sensible, especially in these times, that there should be an extension as far as possible of fixed price contracts. I accept the argument of the hon. Member for Folkestone and Hythe (Mr. Costain) in that respect. But this Clause deals with the situation in which there is a variation clause and therefore the assumption that the two parties are aware that circumstances may arise in future which will cause them to vary the price agreed in the contract.
Nobody could have anticipated this tax. It is a new form of tax Nevertheless, this kind of variation clause indicates the kind of relationship in which the two parties can get together as reasonable businessmen who hope to do business together in future and say to each other, "The Government are doing so-and-so. We are doing the best we can. We do not expect you to carry the lot. We expect a reasonable compromise arrangement to be made."
I am sure that that is the best way. Any kind of imposition by law would be bound to affect one party differently and disadvantageously from another. But circumstances will vary very considerably, and I should have hoped that the ideal


way of giving effect to what is in everyone's mind is that there should be a reasonable discussion between the two parties to the contract, knowing what is in the Government's minds, knowing that it would be right for there to be some sharing in this, and knowing that it would be wrong for the whole of the tax to be passed on by one party to the other.

9.0 p.m.

Sir Gerald Nabarro: The Chief Secretary's reply was most unsatisfactory. I have spent my commercial life entering into fixed-price contracts—[Interruption.]Does the Financial Secretary wish to intervene?

Mr. MacDermot: All that I did was to express the opinion that I am sure that the hon. Member for Worcestershire, South (Sir G. Nabarro) draws them very well.

Sir G. Nabarro: The hon. and learned Gentleman is a "silk", and, before he went into the Treasury, it was his business to advise people how to draw up contracts. If I had taken the advice of "silks" all my commercial life, I should have been in Carey Street years ago.
Any businessman accepts reasonable hazards and risks when he enters into a fixed price contract. What he does not expect is what is tantamount, to my mind, to force majeure in a fiscal sense, having foisted on him a large additional impost which could not be foreseen. Having regard to those circumstances, it would not be unreasonable for the Treasury to make a relaxation in the Selective Employment Tax. That is the point of principle.
The second point is one about which I feel much more strongly. The behaviour of the present Government has been loaded against private enterprise industry and contracting—I call it anti-business—from the first day that they came into office. The businessman today is harassed and overburdened with taxation, regulations, bureaucratic interference and controls. As the First Secretary has said, they are more bigoted in a doctrinaire sense than ever before. Never has there been the epitome of bigotry manifest so loud and clear as the discrimination in this Bill for nationalised industries and against the private contractor.
My hon. Friend the Member for Brierley Hill (Mr. Talbot) put the case admirably. He did not exactly draw attention to what I wish to draw attention to now in the context of what I have said about discrimination.
Schedule 1 of the Bill delineates——

Mr. Speaker: Order. We are not discussing the Schedule.

Sir G. Nabarro: No, Sir. I know that we are not. I am making a passing reference to it.
Part I sets out a list of public bodies, the fourth of which is an area electricity board. In the case of the Midland Electricity Board, it is extensively engaged in electrical contracting in competition with a host of private enterprise firms. The board will get its Selective Employment Tax refunded to it, but the private enterprise firm competing with it will not. The electricity board is already heavily subsidised from the Treasury, because it borrows its capital moneys at a preferential rate which is much lower than that at which private industry can borrow. The board will have its tax refunded for a specific contract in respect of the men employed on it. A private enterprise firm, competing for the same work in the same circumstances, will not.
That is a piece of deliberate fiscal discrimination against the private enterprise firm, and perhaps the hon. and learned "silk" will laugh that one off.

Mr. Diamond: Mr. Diamond rose——

Sir G. Nabarro: No. I am not giving way. Be seated. I beg your pardon, Mr. Speaker. I was addressing the Chief Secretary. He was very rude to me the other evening and would not give way during his speech. I say to the learned silk that perhaps he will rise later, if there is time under the Guillotine, and deny that that is a piece of Socialist bigotry and fiscal discrimination against the hard-pressed private enterprise contractor.

Mr. Diamond: I am grateful for the opportunity to say that, although this is not part of the Clause which we are discussing, had I known that the hon. Gentleman intended to discuss this, I would have been able to say, "My hon. and learned Friend can say that this is unfounded. The two will compete on fair terms", and had I had the time I would have explained why.

Sir G. Nabarro: Thousands of men who are engaged in private enterprise and contracting are very anxious about this matter. Every Member on this side of the House has had a circular from his association defining the reasons for their anxiety. How is it that the Chief Secretary has not publicly given an acceptable answer to this?

Mr. Diamond: Because I prefer to make the statement to the House first.

Sir J. Hobson: I raised it in my speech. Why was it not answered if the Government had something to say?

Mr. Diamond: Because it did not—

Mr. Speaker: Order. We cannot have three interventions at once.

Sir G. Nabarro: I am a generous character, and I believe in giving way to my right hon. and learned Friend, but I will happily sit down and, in the 30 seconds remaining, give the Chief Secretary an opportunity, if he has your permission, Mr. Speaker, to tell the House why I am wrong.

It being seven minutes after Nine o'clock,[Consideration of the Bill having been entered upon at seven minutes after Four o'clock], Mr. SPEAKER proceeded, pursuant to Order[18th July], to put forthwith the Question already proposed from the Chair.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 182, Noes 265.

Division No. 159.]
AYES
[9.06 p.m.


Alison, Michael (Barkston Ash)
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
McMaster, Stanley


Allason, James (Hemel Hempstead)
Gibson-Watt, David
Macmillan, Maurice (Farnham)


Awdry, Daniel
Giles, Rear-Adm. Morgan
Maddan, Martin


Baker, W. H. K.
Gilmour, Sir John (Fife, E.)
Maginnis, John E.


Batsford, Brian
Glover, Sir Douglas
Marten, Neil


Beamish, Col. Sir Tufton
Godber, Rt. Hn. J. B.
Maude, Angus


Bennett, Sir Frederic (Torquay)
Goodhart, Philip
Mawby, Ray


Bessell, Peter
Gower, Raymond
Maxwell-Hyslop, R. J.


Biffen, John
Grant, Anthony
Maydon, Lt.-Cmdr. S. L. C.


Birch, Rt. Hn. Nigel
Gresham Cooke, R.
Mills, Peter (Torrington)


Black, Sir Cyril
Griffiths, Eldon (Bury St. Edmunds)
Miscampbell, Norman


Body, Richard
Grimond, Rt. Hn. J.
Mitchell, David (Basingstoke)


Bossom, Sir Clive
Gurden, Harold
Monro, Hector


Boyd-Carpenter, Rt. Hn. John
Hall-Davis, A. G. F.
More, Jasper


Boyle, Rt. Hn. Sir Edward
Hamilton, Michael (Salisbury)
Morgan, W. G. (Denbigh)


Braine, Bernard
Harris, Reader (Heston)
Morrison, Charles (Devizes)


Brinton, Sir Tatton
Harrison, Brian (Maldon)
Mott-Radclyffe, Sir Charles


Brown, Sir Edward (Bath)
Harrison, Col. Sir Harwood (Eye)
Murton, Oscar


Bruce-Gardyne, J.
Harvey, Sir Arthur Vere
Nabarro, Sir Gerald


Buchanan-Smith, Alick (Angus, N&amp;M)
Heald, Rt. Hn. Sir Lionel
Noble, Rt. Hn. Michael


Buck, Antony (Colchester)
Heath, Rt. Hn. Edward
Onslow, Cranley


Bullus, Sir Eric
Heseltine, Michael
Orr-Ewing, Sir Ian


Campbell, Gordon
Higgins, Terence L.
Osborn, John (Hallam)


Carlisle, Mark
Hiley, Joseph
Osborne, Sir Cyril (Louth)


Carr, Rt. Hn. Robert
Hill, J. E. B.
Page, John (Harrow, W.)


Cary, Sir Robert
Hobson, Rt. Hn. Sir John
Pearson, Sir Frank (Clitheroe)


Chichester-Clark, R.
Holland, Philip
Peel, John


Clark, Henry
Hordern, Peter
Percival, Ian


Clegg, Walter
Howell, David (Guildford)
Pike, Miss Mervyn


Cooper-Key, Sir Neill
Hunt, John
Pink, R. Bonner


Cordle, John
Hutchison, Michael Clark
Pounder, Rafton


Corfield, F. V.
Irvine, Bryant Codman (Rye)
Powell, Rt. Hn. J. Enoch


Costain, A. P.
Jenkin, Patrick (Woodford)
Price, David (Eastleigh)


Craddock, Sir Beresford (Spelthorne)
Jones, Arthur (Northants, S.)
Quennell, Miss J. M.


Cunningham, Sir Knox
Jopling, Michael
Ramsden, Rt. Hn. James


Currie, G. B. H.
Joseph, Rt. Hn. Sir Keith
Rawlinson, Rt. Hon. Sir Peter


Dance, James
Kaberry, Sir Donald
Rees-Davies, W. R.


Davidson, James (Aberdeenshire, W.)
Kershaw, Anthony
Renton, Rt. Hn. Sir David


d'Avigdor-Goldsmid, Sir Henry
Kimball, Marcus
Ridley, Hn. Nicholas


Dean, Paul (Somerset, N.)
Kirk, Peter
Rossi, Hugh (Hornsey)


Deedes, Rt. Hn. w. F. (Ashford)
Knight, Mrs. Jill
Russell, Sir Ronald


Dodds-Parker, Douglas
Lambton, Viscount
St. John-stevas, Norman


Doughty, Charles
Lancaster, Col. C. G.
Scott, Nicholas


Douglas-Home, Rt. Hn. Sir Alec
Langford-Holt, Sir John
Sharples, Richard


Eden, Sir John
Lewis, Kenneth (Rutland)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Lloyd, Ian (P'tsm'th, Langstone)
Sinclair, Sir George


Evans, Gwynfor (C'marthen)
Lloyd, Rt. Hn. Selwyn (Wirral)
Stainton, Keith


Eyre, Reginald
Longden, Gilbert
Steel, David (Roxburgh)


Farr, John
Loveys, W. H.
Stodart, Anthony


Fisher, Nigel
Lubbock, Eric
Stoddart-Scott, Col. Sir M. (Ripon)


Fletcher-Cooke, Charles
McAdden, Sir Stephen
Summers, Sir Spencer


Fortescue, Tim
MacArrhur, Ian
Talbot, John E.


Foster, Sir John
Macleod, Rt. Hn. Iain
Tapsell, Peter




Taylor, Edward M.(G'gow, Cathcart)
Wainwright, Richard (Colne Valley)
Winstanley, Dr. M. P.


Taylor, Frank (Most Side)
Walker, Peter (Worcester)
Wolrige-Gordon, Patrick


Teeling, Sir William
Ward, Dame Irene
Wood, Rt. Hn. Richard


Temple, John M.
Weatherill, Bernard
Wylie, N. R.


Thatcher, Mrs. Margaret
Webster, David
Younger, Hn. George


Turton, Rt. Hn. R. H.
Wells, John (Maidstone)



van Straubenzee, W. R.
Whitelaw, William
TELLERS FOR THE AYES:


Vaughan-Morgan, Rt. Hn, Sir John
Wills, Sir Gerald (Bridgwater)
Mr. Pym and Mr. Blaker.


Vickers, Dame Joan
Wilson, Geoffrey (Truro)





NOES


Abse, Leo
Dunnett, Jack
Lestor, Miss Joan


Albu, Austen
Dunwoody, Mrs. Gwyneth (Exeter)
Lever, L. M. (Ardwick)


Alidritt, Walter
Eadie, Alex
Lewis, Ron (Carlisle)


Allen, Scholefield
Edwards, William (Merioneth)
Lomas, Kenneth


Anderson, Donald
Ellis, John
Loughlin, Charles


Archer, Peter
English, Michael
Luard, Evan


Armstrong, Ernest
Ensor, David
Lyon, Alexander W. (York)


Ashley, Jack
Faulds, Andrew
Lyons, Edward (Bradford, E.)


Atkins, Ronald (Preston, N.)
Fernyhough, E.
McBride, Neil


Atkinson, Norman (Tottenham)
Finch, Harold
MacColl, James


Bacon, Rt. Hn. Alice
Fitch, Alan (Wigan)
MacDermot, Niall


Bagier, Gordon A. T.
Floud, Bernard
Macdonald, A. H.


Barnes, Michael
Foley, Maurice
McGuire, Michael


Barnett, Joel
Foot, Michael (Ebbw Vale)
McKay, Mrs. Margaret


Beaney, Alan
Ford, Ben
Mackenzie, Gregor (Rutherglen)


Bence, Cyril
Forrester, John
Mackie, John


Benn, Rt. Hn. Anthony Wedgwood
Fowler, Gerry
Maclennan, Robert


Bennett, James (G'gow, Bridgeton)
Fraser, John (Norwood)
McMillan, Tom (Glasgow, C.)


Bidwell, Sydney
Fraser, Rt. Hn. Tom (Hamilton)
McNamara, J. Kevin


Binns, John
Freeson, Reginald
MacPhereon, Malcolm


Bishop, E. S.
Gardner, A. J.
Mahon. Peter (Preston, S.)


Blackburn, F.
Garrett, W. E.
Mallalieu, J. P. W. (Huddersfield, E.)


Blenkinsop, Arthur
Garrow, Alex
Manuel, Archie


Boardman, H.
Ginsburg, David
Mapp, Charles


Booth, Albert
Gourlay, Harry
Marquand, David


Boston, Terence
Gray, Dr. Hugh (Yarmouth)
Marsh, Rt. Hn. Richard


Bottomley, Rt. Hn. Arthur
Greenwood, Rt. Hn. Anthony
Mason, Roy


Bowden, Rt. Hn. Herbert
Gregory, Arnold
Mayhew, Christopher


Boyden, James
Grey, Charles (Durham)
Mellish, Robert


Braddock, Mrs. E. M.
Griffiths, David (Rother Valley)
Mendelson, J. J.


Bradley, Tom
Griffiths, Rt. Hn. James (Llanelly)
Mill an, Bruce


Bray, Dr. Jeremy
Gunter, Rt. Hn. R. J.
Miller, Dr. M. S.


Brooks, Edwin
Hamilton, James (Bothwell)
Mitchell, R. C. (S'th'pton, Test)


Broughton, Dr. A. D. D.
Hamilton, William (Fife, W.)
Molloy, William


Brown, Rt. Hn. George (Belper)
Hamling, William
Morgan, Elystan (Cardiganshire)


Brown, Hugh D. (G'gow, Provan)
Hannan, William
Morris, Charles R. (Openshaw)


Brown, Bob (N'c'tle-upon-Tyne, W)
Harper, Joseph
Moyle, Roland


Brown, R. W. (Shoreditch &amp; F'bury)
Hart, Mrs. Judith
Murray, Albert


Buchan, Norman
Haseldine, Norman
Neal, Harold


Butler, Herbert (Hackney, C.)
Hattersley, Roy
Norwood, Christopher


Butler, Mrs. Joyce (Wood Green)
Hazell, Bert
Oakes, Gordon


Callaghan, Rt. Hn. James
Henig, Stanley
Ogden, Eric


Cant, R. B.
Herbison, Rt. Hn. Margaret
O'Malley, Brian


Carmichael, Neil
Hooley, Frank
Orbach, Maurice


Castle, Rt. Hn. Barbara
Horner, John
Orme, Stanley


Coe, Denis
Houghton, Rt. Hn. Douglas
Oswald, Thomas


Coleman, Donald
Howarth, Harry (Wellingborough)
Page, Derek (King's Lynn)


Concannon, J. D.
Howarth, Robert (Bolton, E.)
Pannell, Rt. Hn. Charles


Conlan, Bernard
Howie, W.
Park, Trevor


Corbet, Mrs. Freda
Hughes, Emrys (Ayrshire, S.)
Parker, John (Dagenham)


Cousins, Rt. Hn. Frank
Hughes, Hector (Aberdeen, N.)
Parkyn, Brian (Bedford)


Craddock, George (Bradford, S.)
Hughes, Roy (Newport)
Pearson, Arthur (Pontypridd)


Crawshaw, Richard
Hunter, Adam
Peart, Rt. Hn. Fred


Crosland, Rt. Hn. Anthony
Hynd, John
Pentland, Norman


Crossman, Rt. Hn. Richard
Jackson, Peter M. (High Peak)
Perry, Ernest G. (Battersea, S.)


Cullen, Mrs. Alice
Janner, Sir Barnett
Perry, George H. (Nottingham, S.)


Darling, Rt. Hn. George
Jay, Rt. Hn. Douglas
Price, Christopher (Perry Barr)


Davidson, Arthur (Accrington)
Jeger, George (Goole)
Price, Thomas (Wes though ton)


Davies, Dr. Ernest (Stretford)
Jeger, Mrs. Lena (H'b'n&amp;St. P'cras, S.)
Price, William (Rugby)


Davies, G. Elfed (Rhondda, E.)
Jenkins, Hugh (Putney)
Probert, Arthur


Davies, Ednyfed Hudson (Conway)
Jenkins, Rt. Hn. Roy (Stechford)
Pursey, Cmdr. Harry


Davies, Harold (Leek)
Johnson, Carol (Lewisham, S.)
Rankin, John


Davies, Ifor (Gower)
Jones, Dan (Burnley)
Redhead, Edward


Davies, Robert (Cambridge)
Jones, J. Idwal (Wrexham)
Rees, Merlyn


Dell, Edmund
Judd, Frank
Rhodes, Geoffrey


Dewar, Donald
Kelley, Richard
Richard, Ivor


Diamond, Rt. Hn. John
Kenyon, Clifford
Roberts, Albert (Normanton)


Dobson, Ray
Kerr, Russell (Feltham)
Roberts, Gwilym (Bedfordshire, S.)


Doig, Peter
Lawson, George
Robinson, Rt. Hn. Kenneth (St. P'e'as)


Donnelly, Desmond
Leadbitter, Ted
Rodgers, William (Stockton)


Driberg, Tom
Ledger, Ron
Roebuck, Roy


Dunn, James A.
Lee, John (Reading)
Rose, Paul







Ross, Rt. Hn. William
Summerskill, Hn. Dr. Shirley
Willey, Rt. Hn. Frederick


Rowland, Christopher (Meriden)
Swain, Thomas
Williams, Alan (Swansea, W.)


Rowlands, E. (Cardiff, N.)
Symonds, J. B.
Williams, Alan Lee (Hornchurch)


Ryan, John
Taverne, Dick
Williams, Clifford (Abertillery)


Sheldon, Robert
Thomas, lorwerth (Rhondda, W.)
Williams, Mrs. Shirley (Hitchin)


Shinwell, Rt. Hn. E.
Thornton, Ernest
Williams, W. T. (Warrington)


Shore, Peter (Stepney)
Tinn, James
Willie, George (Edinburgh, E.)


Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Tuck, Raphael
Wilson, Rt. Hn. Harold (Huyton)


Short, Mrs. Renée (W'hampton, N. E.)
Varley, Eric G.
Wilson, William (Coventry, S.)


Silkin, John (Deptford)
Wainwright, Edwin (Dearne Valley)
Winnick, David


Silkin, S. C. (Dulwich)
Walker, Harold (Doncaster)
Winterbottom, R. E.


Silverman, Sydney (Nelson)
Wallace, George
Wyatt, Woodrow


Slater, Joseph
Watkins, David (Consett)
Yates, Victor


Small, William
Weitzman, David



Snow, Julian
Whitaker, Ben
TELLERS FOR THE NOES:


Spriggs, Leslie
White, Mrs. Elrene
Mr. Ioan L. Evans and


Steele, Thomas (Dunbartonshire, W.)
Whittock, William
Mr. Walter Harrison.


Stewart, Rt. Hn. Michael
Wigg, Rt. Hn. George

MR. SPEAKER then proceeded to put forthwith the Questions on Amendments to the Bill, moved by a member of the Government, of which notice had been given.

Clause 1.—(SELECTIVE EMPLOYMENT PREMIUM.)

Amendment made: In page 1, line 29, at end insert:
(ii) activities by way of the manufacture from exposed film of cinematograph films for public exhibition; or.—[Mr. Gunter.]

Clause 5.—(REFUNDS TO CHARITIES.)

Amendment made: In page 7, line 8, after "may", insert "reasonably".—[Mr. Gunter.]

Clause 6.—(SPECIAL REFUNDS FOR CERTAIN HOUSEHOLDS.)

Amendment made: In page 8, line 22, leave out from "to" to end of line 24 and insert:
such of the tribunals constituted in accordance with Schedule 3 to the Ministry of Social Security Act 1966 as under that Schedule has jurisdiction in the case in question."—Mr. Gunter.]

Clause 7.—(REGISTERS, CLAIMS, DETERMINATION OF QUESTIONS, ETC.)

Amendments made: In page 9, leave out lines 11 and 12 and insert:
of the payment of selective employment tax in respect of persons engaged in employment in, or carried out from, the establishment as the Minister concerned may reasonably require".

In line 39, leave out subsection (4).

In page 10, line 16 leave out "appointed" and insert "established".—[Mr. Gunter.]

Clause 8.—(ENFORCEMENT ETC)

Amendment made: In page 10, line 28, leave out "7(4)" and insert "7(1)(b)".—[Mr. Gunter.]

Clause 10.—(INTERPRETATION, ETC.)

Amendments made: In page 13, line 31, after "under", insert "minimum list heading 486 or under".

In page 14, line 6, after "and", insert "in Schedule 1 to this Act".—[Mr. Gunter.]

Schedule 1.—(PAYMENTS TO PUBLIC BODIES.)

Amendment made: In page 16, line 36, leave out from "in" to end of line 37 and insert:
wholesale or retail dealing in coal".—[Mr. Gunter.]

9.20 p.m.

The Minister of Labour (Mr. R. J. Gunter): I beg to move, That the Bill be now read the Third time.
I do not propose to take any time in going over once again the arguments that have been deployed on the merits of the Bill. My hon. and learned Friend the Financial Secretary will reply to the debate, and will then no doubt take up any points that have been made, but I think that it will be for the convenience of the House if I say something about the way in which the Bill will operate in practice, and, in particular, about the arrangements we propose to adopt for the registration of establishments and the payment of premiums and refunds.
When moving the Second Reading, I said that we would endeavour to keep the registration procedure as simple as possible, and that we would let employers know in good time what they would have to do. We have drawn up our


plans in consultation with the Confederation of British Industry and the Association of British Chambers of Commerce, and I am most grateful to them for the help they have given.
Employers who consider that they are entitled to premium or refund will be invited through the Press and by other publicity early in September to ask at the Ministry of Labour's local offices for the necessary forms on which to apply for the registration of their establishments. Local offices will then send them a copy of the "Guide to Employers", which will, I hope, be of help to them in completing the application forms. Employers will be asked to return the completed forms to their local offices between the beginning of October and the end of December.
The local office will tell the employer as soon as his establishment has been registered, and will, at the same time, send him a claim form covering the period from 5th September to 1st January. In some instances, the local office may need to ask an employer for additional information, or for clarification of information already given.
If the Ministry should reject an application for registration, the employer will be informed, and he will be given the reason. He will then have a right to appeal to an industrial tribunal. Draft regulations governing the procedure to be followed in relation to appeals have been considered by the Council on Tribunals. Full information on how to appeal will be made known to employers in due course.
The first claim period will cover 17 weeks, and after that the normal claim period will be 13 weeks. Employers whose establishments have been registered may send in their claims as soon as the first claim period is ended. This means that completed forms will reach local offices of the Ministry of Labour from the beginning of January onwards. Repayments will be made during the first quarter of 1967—the first of them, of course, within a few days.

Sir D. Glover: Does that mean that repayments will always be 13 weeks in arrears?

Mr. Gunter: Yes. The first 17 weeks will date from 5th September, and after that the period will be 13 weeks.
Employers will be told that payment has been made by credit transfer to their banks, and they will, at the same time, be sent claim forms for the next period. It is our intention to transfer the work of dealing with claims and repayments as soon as practicable to a computer. We also intend, once the initial phase is passed, to stagger the claim periods—this relates to the point raised by the hon. Member for Ormskirk (Sir D. Glover)—so that each month roughly one-third of all the establishments entitled to premiums or refunds will be able to claim payments in respect of the previous quarter.
This will enable employers, on average, to get the money to which they are entitled more quickly and will also enable the Ministry to spread the work over a quarter in a more organised and efficient way. To ensure that no employer is worse off as a result of the introduction of staggering, we shall introduce the change-over in May and June, 1967, by advancing payments to some of the employers in the field.

Sir Knox Cunningham: As I understand, there will be a 13-week delay in repayment and this will apply to charities. For example, the Y.M.C.A. will have to pay £125,000 in a year, which means that in any one period it will have over £25,000 out on interest-free loan to the Government. Is this so?

Mr. Gunter: We start on 5th September to 1st January. Then many of the claim forms will be in and we shall start paying as quickly as possible. That 13 weeks, or the 17 weeks in the first case, will be the contributing period.

Mr. Gower: The answer is "Yes".

Mr. Gunter: Yes. I was not trying to dodge the point. I thought that the hon. and learned Gentleman was on the question of 17 weeks.

Sir Knox Cunningham: I meant the 13 weeks.

Mr. Gunter: It was the hon. Member for Ormskirk who misled me before.
The arrangements for dealing with charities have been discussed between the various Departments concerned and representatives of the National Council


for Social Services, and the Church Commissioners. Charities, whether registered under the Charities Act, or not, will be asked to obtain a certificate from the Charity Commissioners, the Department of Education and Science, or the Secretary of State for Scotland, as appropriate, which they should send to the nearest local office of the Ministry between October and December.
The local office will then tell each charity that it has been recorded as a charity for the purpose of the Act, and it will at the same time send it a claim form. The arrangements for claims and repayments will be the same as those for other employers, but, as my right hon. Friend the Chief Secretary has said, we shall keep these arrangements under review.
In Committee, hon. Members expressed a very proper concern about the records which employers might be required to keep. I explained at that time that Ministers intended to be reasonable in their requirements. There was some doubt about the reasonableness of Ministers of all colours. Therefore, we have looked again at this matter and the Amendments which have been incorporated in the Bill today have turned these good intentions into statutory obligations.
The hon. and learned Member for Southport (Mr. Percival) will be gratified to know that I do not require employers to keep records in any particular form. Employers who claim repayments of the tax will have to ensure that adequate records exist to enable an authorised officer of the Ministry to satisfy himself as to the amount of tax paid and the number of men, women, boys and girls in respect of whom the tax has been paid. So long as this information is readily available, the employer may suit his own convenience as to the way in which it is recorded. This will all be set down in the "Guide to Employers", to which I have already referred.
Repayments under Clause 6 of the Bill to employers of domestic or nursing assistants in private households will normally be made three months in arrears Initial claims will be invited during the period from the beginning of October to the end of the year. This means that employers who qualify under Clause 6 will get their first refunds at

different times and for different periods. Second and subsequent repayments to each employer will be made at three-monthly intervals. As my right hon. Friend the Chief Secretary mentioned earlier this evening, my right hon. Friend the Minister of Pensions and National Insurance will be announcing in due course special arrangements which we propose to make for refunds at monthly intervals to employers for whom the longer period would cause hardship.
It may be helpful if I say a few words about the "non-qualifying activities" provisions of the Bill and how they will operate. As the House knows, the purpose of these provisions is to ensure that establishments which are mainly concerned in office work or in sales do not qualify for the premium or for refunds; and that establishments in which a substantial number of the employees are engaged in the transport of the employer's own goods qualify for refunds rather than for premiums.
Among the non-qualifying activities are activities carried on for office purposes within the meaning of Section 1(2) of the Offices, Shops and Railway Premises Act, other than certain named exceptions. Some people seem to have interpreted the term
activities carried on for office purposes
as including the work of such people as works managers, planning engineers, design staff and computer programmers. This interpretation is based on the assumption that a man who works in an office must, therefore, be employed for office purposes within the meaning of the Offices, Shops and Railway Premises Act.
This is not so. The engineer who is doing calculations is not engaged in clerical work merely because he is writing. The fact that he works in an office is not sufficient in itself to make him employed for office purposes. Therefore, the term, "for office purposes" carries a much narrower meaning than many people may have realised. Fears which may have been expressed that such important contributors to the manufacturing process as design staff will be counted as engaged in non-qualifying activities are groundless.

Mr. John Hynd: We are very glad to have this assurance, but I wonder whether my right hon. Friend could tell us on


what legal interpretation or principle it is based? It is one thing to have an assurance from the Minister, but another thing for it to stand up in the courts.

Mr. Gunter: All I can say is that the best legal advice has been given to me that this is so.

Sir J. Hobson: This is a very important point. Many people are very anxious about it. Anyone engaged in writing is, of course, within the definition, but how does the right hon. Gentleman distinguish among those who are in the definition between those who are writing and those who are not? What is the definition which divides the sheep from' the goats?

Mr. Gunter: All I can say is that the legal advisers tell me that it can be distinguished in this manner and that the Offices, Shops and Railway Premises Act distinguishes it in this way.

Sir Lionel Heald: Will the Minister tell the House whether, under Amendment No. 96 which we passed, the editor of The Times is included?

Mr. Gunter: Under Amendment No. 96 even the editor of The Times qualifies.
I want to make clear that the term "non-qualifying activities" includes only the activities specified as such in the Bill itself. An activity is not non-qualifying merely because it does not attract a refund. The number of persons employed in connection with non-refund activities has a material bearing on whether an establishment satisfies the first of the two conditions set out in subsections (2,b) of Clauses 1 and 2. It does not in itself have any bearing on whether the establishment satisfied the second.
Because they have put too wide an interpretation on the term "for office purposes", and have concluded that a non-refund activity must also be non-qualifying, some people have concluded that the effect of the "non-qualifying activities" provisions will be to exclude a larger number of establishments from entitlement to premiums and refunds than will be the case.
No new tax is popular, and I do not know that any old taxes are popular, but my right hon. and hon. Friends have given assurances and I repeat, that we shall keep the working of the tax under

review during the first year of its operation, with the aim of making modifications if they prove necessary or desirable. We shall take into account any representations that may be made by interested industrial organisations and we shall consult closely with the Confederation of British Industry.

9.36 p.m.

Sir J. Hobson: I have seldom heard a major Government Measure moved with less enthusiasm, nor supported by fewer hon. Members opposite. This is one of the Government's major Measures of this Session, but the benches opposite are almost empty. While we had a faint cheer when the Minister rose, I have no doubt that it was the universal sympathy that people felt for him and not enthusiasm for the Bill that prompted those noises from behind him.
Now that we come to the Bill on Third Reading, we hear nothing from the Minister about its impact, its effect, or how it will operate. He regards the whole thing as an administrative exercise for his Department. That is how the Bill has been presented and run through, because the unfortunate Minister of Labour has been appointed the agent of the Chancellor of the Exchequer and has had this horrible job dumped on his plate and wants to get through it as efficiently as possible.
Apart from the administrative problems for the Minister of Labour, the Bill will have an effect on employers and workpeople throughout the country. It is likely to have a very unusual and perhaps a severe effect upon employers and the expansion and growth of our industries.
Like the Prices and Incomes Bill now being discussed in Standing Committee B, this is legislation that was never mentioned a short four months ago when the Labour Party was seeking the votes of the electorate. There was not one mention of either of these Measures in the course of the General Election. This is simply a device thought up by the Chancellor to conceal from the people that after such fair promises in March the Government were at once embarking on strong measures of deflation and imposing additional taxation to the tune of £315 million.
When the tax was first proposed, and at Second Reading on 23rd June, there was


no talk of redeployment of labour, the new euphemism for promoting unemployment, or of the tight and bitter freeze that the Government are now imposing. Now, on Third Reading, we are discussing this Measure against that background, and we must consider the Bill's impact against the background of the Government's total freeze on prices and wages. These two Measures are the hammer and the anvil between which our growth, investment, expansion and prospects are to be battered and reshaped in the coming months. Who dare forecast what the forge and the smith will in the end produce when the heat at last is off?
Prices will be frozen. Presumably, though we have not been told by any Minister so far, no relaxation will be allowed to any industry or trade to take account of the impact of this tax upon its costs. We do not know for certain. We should like to know, and perhaps whoever is to wind up will tell us. But let us assume—I think this must be so—that the Government mean to peg not only wages but prices and that, this being so, they could not allow one piece of relaxation to anyone paying the tax to take account of the impact of it upon his costs.
Thus, during the period from September to January next, when the freeze is at its tightest and when no relaxations are to be allowed, every employer in this country, industrial, agricultural, charitable or private, will be paying the tax, and not one, save for a few excepted cases, will get a penny back. The Government will receive £100 million a month from the employers in this country and by January they will have collected £500 million.
Employers will have no chance whatever of meeting the cost of the tax by raising their prices. They will have no chance of borrowing money from the banks. As redeployment bites, intense pressure will, naturally, be exerted upon them by the trade unions not to get rid of labour. Those industries which are to have a premium in the end will have pressure upon them to keep their labour force but, nevertheless, if they were to get rid of some of their labour force as a result of the impact of the Bill, they would have the problem of redundancy payments falling upon them.
Everyone can see the inevitable result between now and next January. No prospects for growth. No prospects for

modernisation. No prospects for investment. No prospects for expansion. Here is the recipe for recession with a vengeance.
Then we come to February. Suddenly, and selectively, the Government will pour out money which they have been collecting during the previous period. As the thaw begins, all will be changed. In the mushy period at the beginning of the thaw, the angels of industry will receive not only the money they have paid out but a little prize of 7s. 6d. a head. Agriculture, fishing, forestry and quarrying and others will get money back to put them in funds for the next period while they are paying the tax. Their liability will continue, of course. They will get money back from the Government and they will be paying tax out to the Government, and so the money will shuttle back and forth between the two.
But the goats, poor things, those excluded from any form of benefit or refund under the Bill, will be left to continue to carry the burden at a time when, no doubt, prices will still be tight and they will still have little opportunity to recoup the burden falling upon them. It will be a great burden falling chancily and indiscriminately upon different people. In the pottery trade, in which the labour charge forms a large proportion of the costs of manufacture, it will be an infinitely heavier burden while this process is going on than it will be in an industry which is highly mechanised and in which the labour cost is small as a proportion of total product cost.
The indiscriminate effect will be seen in the severe impact of the tax upon laundries. Laundries will suffer particularly by the impact of the tax because almost all the costs of a laundry are labour costs. The bite of the tax on laundries is infinitely different from its bite on many other service trades which, perhaps, provide a valuable and expensive service at quite small labour cost.
The Government originally introduced this Measure on the basis that it would lead to a redistribution of labour between service and manufacturing industries. This is what the White Paper said and what the Chancellor said in his Budget speech. On the Second Reading of the Finance Bill, however, the Chancellor said that it would have no very large effect in that direction. On Monday this


week the Financial Secretary told us that its only impact would be on recruiting into industries. Then we had him on an Amendment this afternoon speaking on what his right hon. Friend had said about many people looking carefully at the way they employed their labour and cutting down. What is the Government intending to do? Is it part of their measures for redeployment, creating unemployment in certain sectors and getting people to shift their jobs, or not? We really ought to know exactly what impact the Government think this Measure combined with other Measures is to have on the employment prospects for the workpeople of this country.
The really ridiculous feature of the Bill, apart from the discrimination it has according to whether or not people are labour intensive in particular different industries, is that the whole basis of discrimination in this Bill and the way it operates is itself without any real relevance at all to the importance of the economic function. It selects people according to whether they are on one side of a line or another. Angels, sheep and goats are put into separate categories, not according to any economic principles, but wholly on the foundation of statistical calculations which may be perfectly all right for putting people into different labour pigeonholes in a statistical exercise; but when we come down to applying this to individual workpeople and individual businesses it has the most extraordinarily discriminatory effect and produces absurdities and anomalies, such as dividing those who get their money back from those who really bear the burden of the tax.
This Bill bears upon its face the method by which it has been forced through this House into legislation. It bears these undiscriminating distinctions because we have hardly had a chance, by reason of the severity of the guillotine imposed by the Government, properly to discuss the issues which the Bill involves. The Government have been moving Amendments up to the last minute. We had this—I will not say pantomime—this procedural performance which the Minister had to go through of putting through a whole series of Amendments not one of which was explained; and throughout the Committee stage almost

every Government Amendment has gone through without the slightest explanation. While we are grateful for some of the things which have been done, it really is not the way to shape legislation of this importance that affects every business and employee in the country.
Two concessions have been put on the Order Paper which were passed formally a few minutes ago, the only two as far as I know which the Government have made in the system of classifying those who are to get refunds and those who are not. The two which were made concerned the newspaper industry and the film industry. No doubt they have very good cases for their particular problems to be so dealt with, but would it be unreasonable to suggest that they now find themselves in the Bill because they are the two industries which are concerned with communications and that all the other people who are much more important to our economy—the construction industry, the oil industry, laundries and a host of others—had just as good and perhaps an even better case if we had been able to discuss them?
Why are the Government putting only those two into the Bill without discussing anyone else? When we look at the Amendment affecting films, while it may seem really attractive we find it has really done absolutely nothing in the sense that the film makers get nothing, the studios get nothing. It is really bogus to suggest that it gives any real help, because it merely allows the actual process of turning the film which has been exposed into a condition in which it can be exhibited. That tiny area only is getting a relaxation of tax. My information is—I do not know whether it is true—that the Amendment proposing this minor and bogus concession to the film industry was tabled before the Board of Trade, which is responsible for the industry, had ever seen it. I do not know whether that is true, but if it is it shows the sort of way in which the Government are legislating at this stage.
The idea behind the Bill, which came out clearly in the Minister's speech, is that what suits administrators and what solves the administrative problem and what is most convenient for the Ministry of Labour must be done, regardless of the impact on trade, or industry, or employer, or employee. We got one


small concession by our debate the other evening, and we are very grateful that the Minister has decided that he really does not need to direct that everybody should keep records and how he should keep them. If we had been able to discuss the Bill a little more, it might have been made slightly more convenient for industry and for the citizen instead of for the Government.
But the administrative approach to the Bill has also led to what I regard as a serious defect in a Measure for seeing that the bite of taxation falls fairly between citizen and citizen. Throughout the Bill one finds that many important decisions are left solely to the discretion of individual Ministers and they are allowed in their sole discretion to grant or withhold serious and substantial tax advantages and disadvantages. It surely must be wrong that the impact of taxation on many citizens and many businesses should depend solely upon the discretion of Ministers and the way in which they exercise it.
Let me give some examples. Clause 1(2) provides that certificates may be given by the Minister of Technology or the Minister of Labour who can declare that establishments are entitled to refund who might not otherwise have been within the Bill, or they can withhold the certificates in exactly similar circumstances when they have given them to other persons within that category. In Clause 2(2) the same power to grant or withhold qualifications for the payment of refunds is given to the Minister of Agriculture and the Secretary of State for Scotland who are able to grant a certificate which may make an immense difference to the amount of money received by a business in the course of the following year.
In Clause 3 an absolute discretion is given to Ministers to make any refunds they like, with or without premiums, to the nationalised industries as they may decide. In Clause 4 they are given absolute discretion to make any payment, including a premium of any amount, and with discretionary preference for any local authorities or other bodies within Clause 4 and they can pay to some and withhold from others exactly as they please.
The Government may say that Ministers will be very fair and reasonable and

extremely good administrators, but it has to be realised that in this Bill, which lays down the bite of taxation between one citizen and another, we are simply putting it on the basis not of what Parliament decides, but of what individual Ministers may decide and which may be vital to the interests of individual citizens.
Most surprisingly of all, in Clause 7(5) Ministers are given a complete discretion as to the time and manner and conditions upon which they will make repayments. We debated this matter the other day when we had complete obstinacy from the Government and no relaxation at all. Parliament may say that people should be entitled to have their money back if they fulfil certain conditions, but for the Government to take powers to pay it if and when they like and to pay it in any manner they like and to pay it subject to such conditions as they may impose seems to be an extraordinary way in which to legislate for the bite of taxation.
Finally, in Clause 10, most important of all, perhaps, complete discretion is given to Ministers to marry or divorce establishments. We all know that the way in which one puts together different units or separates them may make the difference between whether one gets a refund or the premiums or nothing at all. Yet a Minister, on his say-so, can put the establishments together so that the whole gets a refund and a manufacturer or a businessman in exactly the same circumstances can be refused, in the discretion of the Minister, that same advantage.
All of these powers are given to Ministers, without direction as to the principles upon which the powers should be exercised. They are to be used without Parliamentary control, without being subject to the courts, without publicity and, most important of all, without one citizen knowing how another citizen has been treated. Parliament will have to be very acute in future in supervising the way in which Ministers exercise these powers of giving or withholding money to individuals.
The other major criticism that I desire to make of the Bill is of the whole concept of establishments. It is a concept which is very convenient for the Minister.


We have been told by the Minister of Labour how they are going to draw up the register. One gets one's name on the register and receives payment back again. When one has taken the piece of land then one counts the nobs and sees what the nobs are doing and so sees if the unit is entitled to claim back. To this extent it may be very convenient for the Minister, but it is utterly ridiculous as a way of taxing employment. It bears no relation at all to the way in which businesses are organised, and it is absurd that a citizen should qualify or fail to qualify according to the number of establishments into which he has divided his activities. This seems to us to be utterly and completely absurd and nonsensical.
It all arises from the fact that the Minister of Labour, very correctly, wants to run an efficient show and have things as simple as possible. It wholly ignores the way in which people really run their businesses. As to the discretionary powers of the Minister to marry or divorce establishments, the whole turns on the Government making a premium or a refund or nothing payable. They will take a little piece of land, look at the people working on it, and count up what they are doing. One of the things that disqualifies is when people are engaged in office purposes. That includes the purposes of administration, clerical work, handling money and telephone and telegraphic operating. And clerical work by definition includes writing, book-keeping, sorting papers, filing, typing, duplicating, machine accounting and drawing. Are draftsmen included within drawing or is it a different sort of drawing which the Minister has been advised by some unknown legal pundit is without the Act?
There are large sections of industry, particularly people working in offices, who are left largely undefined by the adoption of this provision. It is all very well the Minister saying that it is going to be much better than was thought. Everyone ought to know. As was pointed out to him, it does not matter what the Minister now says. It is what the industrial tribunals decide when they come to consider individual cases throughout the country. There is a very wide margin in this definition which may make the whole difference between enabling establishments to get a refund plus the

premium on the one hand or to receive nothing at all on the other.
Let me give an example of this absurd method of endeavouring to discover how this tax will bite. There is a company in the forefront of the electronic research and development industry which exports 50 per cent. of its output It is a large organisation employing 5,700 employees, the majority of whom, counted as a whole and treated as in a single business are not in non-qualifying employment. If that business was taken as a whole it would be entitled to refund and premium for all of its 5,700 workers. It so happens that it is organised into 24 separate establishments spread round the country. One of them is its headquarters at which most of its clerical, many of its transport, and all of its sales and administrative staff are engaged. That unit will plainly, if treated separately, be disqualified. It will lose a refund of £330,00 a year by its treatment as a separate unit. Of its other establishments, 16 qualify and 8 do not.
If one treated the business as a whole—we tabled Amendments to try to secure this, but none of them was adopted and nor have the Government taken steps to try to help—the net annual gain from the refund would be £200,000. If its establishments were split up, the net result would be that it would pay £215,000. The difference is £400,000 a year for this business.
All this depends on the say-so of a Minister about what he will marry and what he will divorce. The Government have made no attempt in the Bill to ensure that people who run businesses in a sensible way as single units are treated as one unit. In the motor industry there are manufacturing sections, spares sections, delivery sections and administrative sections. The motor industry cannot understand how the tax can be administered when it has units spread all over places like Birmingham and Coventry which will all be split into penny packets.
It is all very well the Minister saying, "You just keep the records". If he does not marry the establishments, every business must keep a record of tranfers between internal establishments such as it has never kept before. If an organisation has 24 separate establishments, some


of which qualify and some of which do not, and it moves its transport or clerical staff from one department to another, it will have to split the records into different establishments. This is one of the ways in which the Bill is being administered.
These are the outstanding features of the Bill and the impact which it will have. This is an ill-conceived, misjudged, misshapen abortion of a Bill, and we should terminate the pregnancy as soon as possible by the sharp and neat surgical operation of destroying it on Third Reading.

10.3 p.m.

Mr. Bernard Weatherill: It used to be said that no subject could be raised in the House on which somebody could not speak as an expert, however obscure it might be. This rule, if rule it be, has certainly held good throughout this debate. A number of my right hon. and hon. Friends, and a number of hon. Members opposite, have raised points on which they have expert knowledge. Attention has been drawn to a number of obvious anomalies and unfairnesses in the Bill. Some of them, such as that concerning charities, have been put right. The anomaly about farmers has been put half right.
There is a smaller anomaly which has been put right to which I should like to draw attention because of my specialised knowledge of it. I should declare an interest. Before I became a Member, I was a bespoke tailor. When I looked at the Standard Industrial Classification, I was staggered to see a note specifically excluding bespoke tailors and dressmakers with workrooms attached to the retail shops from Order 12, a manufacturing section, to Order 20, the distributive section.
I immediately tabled an Amendment to the Bill. Subsequently, I went to see the Parliamentary Secretary to the Ministry of Labour and the Financial Secretary to the Treasury to point out that this was a real and genuine anomaly which. in equity, should be put right. The genuine bespoke tailor, dressmaker or couture house is, in every sense, as much a manufacturer as an engineer. The only difference is that a different kind of material is used—wool, silk or something of that kind, instead of metal. Furthermore, it is just the kind of manufacture

which our economy needs to encourage.
In this trade or industry, the raw materials form a very small part of the cost of the end product. The major cost goes into design, skill and "know-how." For a country which has to import a major part of its raw materials, it would have been quite criminal to penalise an industry which, in that respect, is so important to us in terms of visible and invisible exports.
However, perhaps the strongest point of all is that this industry is responsible for the collection of Purchase Tax. It so happens that the Purchase Tax certificate issued by the Customs and Excise to my own firm specifically calls us a manufacturer. I have another certificate which was issued to a firm in Birmingham only eight days before the publication of the Bill and it says:
I hereby certify that Alderman and Pitt Limited … carrying on business as a manufacturer, has been registered in connection with Purchase Tax.
That is dated 23rd June, as I say, only eight days after the publication of the Bill. I suppose that that shows more than anything what little thought has gone into the Bill. On the one hand, one Government Department calls an industry a manufacturer; on the other, another Government department calls it a retailer. That is not the only anomaly in the Bill, but it illustrates what a mess the Government are in and what a nonsense the Bill is.
I am glad to say that my Amendment has been capped, if that is the right word, by Government Amendment No. 246. It is a very involved Amenment, and I confess that it took some days for me to realise that it nullified my own.
I am encouraged to learn that the Chancellor of the Exchequer himself wrote to the President of the National Federation of Merchant Tailors and to the Chairman of the Incorporated Society of London Fashion Designers saying that in future they would be classified as manufacturers. Although I disagree strongly with the selective element in the Bill, I am content with that and I thank the right hon. Gentleman. Had he not done so, there is no doubt that a very large number of famous houses and businesses in the trade would have gone into liquidation.
Although it is a small industry in terms of the people which it employs, it is very important in terms of the country's economy. A large number of people still come to England, and London in particular, to buy their clothes. London has always enjoyed a unique reputation in that respect as the centre of style and fashion. It would have been extremely short-sighted, even of this Government, to have legislated this small and important industry virtually out of existence.
I am grateful for what the Minister has done to correct this one small anomaly, but I still feel that the whole Bill is an anomaly. I am not against the payroll tax as such, but I am absolutely against what I believe are the selective elements in the Bill. The only thing that will save our country is more productive and more efficient industry. I firmly believe that the only way in which we will achieve this is by competition, and fair competition at that, but the Bill legislates for unfair competition.
If the tax is to be permanent, as the Chancellor said when he introduced it, but if modifications are to be made, as the Minister has just said, I hope that the modifications next year will include the abolition of all premiums, and a refund to charities, to old-age pensioners, to the handicapped, and to part timers, and for the rest that it will remain as a payroll tax. Then, and only then, will I be able to concede that this tax has any merit, and then, and only then, will I feel able to vote for it.

10.11 p.m.

Mr. John Hynd: Like the hon. Member for Croydon, North-East (Mr. Weatherill) I should like to thank the Government for a concession which they have made. I am glad that the debate has got off to such a good start, and I shall continue it that way.
The concession to which I am referring is that which the Minister mentioned in connection with Clause 10 about the access to offices and other parts of an establishment. The original Clause did not propose to provide for this. In fact, it laid down specifically that where there was no direct access from one part of the establishment to another they would be treated as separate establishments. I

am therefore grateful to the Minister for having accepted the representations made to him in this respect, and for having made the alteration.
But I am still a little worried about the Clause as it stands and about the criteria which are likely to be accepted by the Minister in deciding whether or not he will recognise divided premises of this kind, and I hope that before the debate ends the Minister will give us some idea of what kind of criteria will be adopted.
The right hon. Gentleman said that it was asking a little much to say that we are not going to give any criterion to the House, we will just leave it to whoever happens to be the Minister at the time, and whoever happens to be acting on account of the Minister. I hope that we can have some reassurance on the matter.
The only other matter that I wish to raise is on this question of design. My right hon. Friend the Minister of Labour has assured us that on the best legal advice which he can obtain, people engaged on design work, it is directly connected with scientific research, which is referred to in Clause 1, will be included for the purpose of the premium. The Clause refers to people who are
employed wholly or mainly in connection with such activities …
that is scientific research. If he is relying on the wording of the Bill, I do not see on what he bases his legal interpretation, because if the wording is taken at its face value, people who are working in offices and are so employed wholly or mainly in connection with scientific research would include the clerks as well.
I do not see where the Minister makes a distinction, nor on what legal principle he bases it, and I am still worried, because we have had this sort of thing so often in the drafting of Acts of Parliament. We get an assurance from the Government spokesman about what is intended by the Government, but we find, in the event, that it is not upheld by the courts. I hope that we shall have information about Clause 10, the criteria which the Minister is likely to adopt in deciding whether a separate establishment is to be treated as one or two, and about the legal interpretation of the reference to designers and drawers we will have some further reassurance.

10.15 p.m.

Sir L. Heald: When the Bill was first foreshadowed by the Chancellor of the Exchequer, I was bold enough to say that I believed it to be as ill-conceived, stupid and useless a piece of taxation as had ever been introduced into the House. At the time, I was castigated by the Government Front Bench and criticised in various newspapers which had not previously considered the matter. It was some time before people appreciated what was involved. We now know that we have passed a large number of provisions with no discussion, about which the country knows nothing but will learn something in the coming months, and there is very little more we can say. However, we can still say, within the rules of order, that those criticisms which I made at the beginning are just as valid today.
One example already mentioned is films. At the beginning, when we examined the Bill—it had been constructed with great care so as to obscure all the points which really mattered—we had to look at this curious document, the classification. Under that, film studios, which produce a method of communication or, in a lawyer's term, something from which people derive information, possibly improvement and certainly amusement, were services. They would pay and get nothing back. Still less would they get a premium.
On the other hand, publishers of newspapers were in another category. They were not only to get their money back, but to get a premium of 7s. 6d. a week for every man employed in this so-called industry which everybody knows is already overmanned. A splendid demonstration of the logical policy of the Government. Everyone agreed that this was not a good idea. A complication arose because the newspapers thought that this was unfair because only those engaged in manual labour or looking after the machines would qualify. The office people, editors, and so on, would not.
We may not realise it, but we have today passed an Amendment, No. 96, resulting from new Clause No. 5, which was not dealt with. That new Clause provided that all the office staff of newspapers should be included in manufacturing. The Government accepted that in their usual clever way, so that nobody

understood what was going on. The Amendment was so worded that it was almost impossible to understand. It meant that the editor of The Times was a manufacturer. What does he manufacture? Some people might wrongly think that he does manufacture things. I should not have thought that he would be proud of this, but he will have to be proud of it tomorrow.
Returning to the subject of films, we—I say "we" because a large number of my constituents work at Shepperton Studios—found ourselves in the position of having to pay £25,000 to £30,000 in S.E.T. These film people are already working on very narrow profit margins. I was appointed, with Lady Wootton, to the Board of British Lion, an organisation designed to maintain the independence of British films. A report was made to us stating that if S.E.T. went through in its present form, Shepperton Studios might have to close down. I should mention that some fine films are made there.
We went to the Board of Trade—and I am purposely being definite in my remarks—and received a very good welcome. These film people were told that they would get consideration. An Amendment was to be tabled. However, tonight we passed a Government Amendment and everyone concerned thought that it would be of real assistance to the film industry. I have only just been able to discover that that will not be the position, because the Amendment gives exemption only in respect of what is done after a film has been completed, at the very last stages.
Is it a fact that that Government Amendment was tabled without consultation with the Board of Trade? I believe that there was no such consultation, because the people concerned went to the Board of Trade and came away with the feeling, as one would expect after meeting the President of the Board of Trade—and, while I do not agree with the right hon. Gentleman politically, I and most hon. Members consider him to be a man who is concerned with what he believes to be the proper performance of his duties and the best interests of trade in this country—that they would get exemption.
As a result of this wonderful guillotine procedure, we have not been able to discuss this matter.[Interruption.] I gather that at any moment an hon. Gentleman


opposite is likely to rise on a point of order and ask, "Is the right hon. and learned Gentleman entitled to go into this matter"? I believe that I am entitled to do so, and in much more detail if I so wish. I discussed the issue tonight, having had considerable difficulty getting in touch with those concerned on the telephone, and I am satisfied that the Amendment proposed by the Government and passed by the House is not adequate and might, as one of my hon. Friends mentioned, even be described as bogus.

Amendment No. 3 stood in my name. It was to Clause 1, page 1, line 29, and was designed to insert, after "Classification":
or in Order XXIII heading 881 so far as that relates to film studios".

The Government Amendment which we passed, and which is supposed to deal with this matter, is Amendment No. 5, standing in the name of the right hon. Gentleman the Minister of Labour, and inserts at the end of subsection (2,a):
(ii) activities by way of the manufacture from exposed film of cinematograph films for public exhibition; or.

I say at once that I have always had, and have expressed in this House, great admiration for the right hon. Gentleman and, as I have done in the past, I like to refer to him as my right hon. Friend.

On the surface, one might think that that covered the exposure of the film and production of the actual cinematographic film, but I find from my inquiries at the Board of Trade today—the Board of Trade, which, I think I might say, answered us in a not altogether unsympathetic way—that it took the view that this Amendment gives virtually no relief at all—as anyone will understand who realises that the whole work of the film studio is done before that stage, which is merely laboratory work.

This is the kind of thing that has been done under the Bill. It may be that we shall be told, and I hope that we will, that this is just a mistake in drafting. That would be a complete vindication of the honesty of all those concerned, and it might be a very nice thing for us to hear. But it is rather difficult to believe that it could be so. This is the sort of thing that is going on every day in this House—the new gimmicks—and it is the kind of thing against which we should protest. I therefore hope that all my hon. and right hon. Friends will direct their attention to this case as an example.

This is a shocking Bill. It goes against the whole trend of what we are all trying to do today. It can only be explained by different policies being followed by different Ministries with no proper control from above. This is a condemnation, not only of the Bill, but of the Government.

10.26 p.m.

Mr. Richard Wainwright: During its passage through the House the Bill has had a few patches of its face washed a little, but it remains a horrid and grotesque thing. To me, the most appealing evidence of this is the way in which the representatives of those who stand to gain premiums from this Measure have joined solidly in condemning it with those who are to be its victims.
For instance, I represent a constituency engaged quite pre-eminently in alleged "manufacturing activities"—to use the Government's term—and conspicuously lacking in what the Government describe as service industries. It consists of small manufacturing communities which, naturally, rely on the large West Riding towns on their borders for the various services. Yet from my constituency I have had not a single commendation of the tax, but a large postbag—as I believe most hon. Members on both sides have had—condemning it.
Those of us who live in the larger commercial cities and are accustomed to reading of strife between the retailers' organisations—very often the chambers of trade—and the larger industrialist organisations; they are very often at war one with another—have noticed how those organisations, with their different interests and viewpoints, have been united in condemning this tax.
That is due primarily to the entirely "phoney" basis of the tax in trying to discriminate between alleged service industries and alleged manufacturing industries. That seemed a shaky concept when it was first unveiled before us, and it has fallen down ignominiously in debate. In the view of the Liberal Party, it cannot be put right by any process of amendment by Order, or by the fulfilment, if they are ever fulfilled, of any promises to refine the tax which the Government have made during the course of debate.
This Bill will hit particularly hard that valuable class in a modern industrial society, the specialists—particularly those who render specialist services, and those who rely on them. I imagine that every

hon. Member representing an industrial or partly industrial constituency is familiar with the dynamic character who is avowedly a specialist, and who tells the world that he is trained and successful in producing a particular line of products and has neither the training nor the resources to be a great organiser.
He does not want to gather under his own factory roof a maintenance squad or a canteen staff under his own orders and employment. He does not want to organise his own research team. He wants to use either the research pool in his industry or a particular research firm. He does not want to do his own advertising, or even his own factory cleaning. In the past he has chosen, very wisely in some cases, to rely on service organisations. He will be heavily penalised vis-à-vis the large, well-established, comprehensive firm which has been able to employ these people under its own roof and which will get a premium in respect of them.
The Bill entirely funks the admittedly difficult problem of the self-employed and remains a backward-looking charter for the village blacksmith and those who become self-employed. This is entirely contrary to the sort of trend which we ought to be encouraging in our present trading position in the world. I do not want to dwell on this because it has been eloquently thrashed out in debate tonight, but the principle of deciding the character of an establishment by the mere counting of heads is extremely offensive to the Liberal Party. Perhaps the House will appreciate that this is even more offensive to us than to members of other parties. By whatever way we look at it this seems an extraordinarily crude way of determining the character of any trading establishment.
I wish to mention a point which, perhaps naturally, has not been deployed by hon. Members from either side of the House so far. That is the considerable evidence there is that as the shadow of buying a weekly stamp, costing in many cases £2 16s. 10d., begins to fall across people's ledgers and cash books, there is evidence that public opinion is making itself felt against this Bill and against the Government who have brought it in. This is revealed in the National Opinion Poll figures which many hon. Members will


have read in today's Daily Mail which show that combined opposition to the Government is now in a decisive majority.
The greater part of the public opinion which has ebbed away from the Government has flowed towards us on this bench who claim that during these debates we have put before the House clear and decisive alternatives to the Government's proposals, against which we intend to vote tonight.

10.33 p.m.

Sir Charles Mott-Radclyffe: We are now coming to the last stage of the long-fought debates on the deplorably ill-thought-out, hastily put together and very badly conceived Measure.
Throughout all the debates, on Second Reading, in Committee and, above all, on Third Reading, as was indicated by the speech of the Minister of Labour, the Government have totally under-estimated the enormous administrative difficulties and problems which will arise when the Act comes into force in September. It was made perfectly clear from the speech of the Minister of Labour, when he was explaining to the House the kind of instructions and advice that was going out to employers, manufacturers and others, that he had no idea of the complications, muddle and uncertainties which will arise.
The Government, in this ill-thought-out Measure have broken almost all the administrative rules of collecting a tax. The golden rule if a new tax is to be imposed is the simple but none the less effective rule that whatever Department collects the money must also be the Department which pays the money back, where any repayment is applicable. But this golden rule has been broken in the Bill, because one Department will collect the sum of 25s. or 12s. 6d. a week per employee from September onwards, but a multiplicity of three, four or five Departments will be assessing the repayment, and a number of Ministerial decisions will be involved.
I do not believe that there is any proper machinery in Whitehall for getting round this problem. The bodies are not yet available, and will not be available by September, for collating the information and transferring it from one Department to another.
The right hon. Gentleman talked about the first period of 17 weeks and the second period of 13 weeks of delay in repayment. Let us take the case of a firm with a payroll of 1,000 in September in which, according to whether it is in category I or category II, there is a shake-out or the reverse. The number of employees might drop by December in the first case to 950 and in the second case it might increase to 1,050. Who will check the difference between 50 plus or minus on the September figures, and how will it be done?
At least, a firm employing 1,000 people has accountants and others to deal with that kind of thing. But what about the farmer, who does not have a firm of accountants behind him, who fills in his own milk returns and all the other forms? Let us suppose that he normally employs five or six men and takes on a couple of extra men for harvest. If the corn harvest is late, as it can easily be if the weather is bad, the two extra men, the casuals, may stay on to help him with the sugar beet harvest. He starts off with five or six men in September, plus two extra men, and the two extra wili stay on until, say, December. If one of his regulars falls ill or has an accident, one of the casuals may stay on for another couple of months to help him out.
When one multiplies that sort of problem hundreds of times all over the country, who will check all this? How will the farmer cope with the forms, and who will check whether they have been filled in accurately or inaccurately? I do not mean that they would be filled in inaccurately on purpose, but simply by mistake.
I do not believe that the right hon. Gentleman and his colleagues have any conception of the tangle of administrative nonsense and uncertainty that will happen over all this. They are doing the ostrich act. They have not the faintest idea of the muddle there will be at the paying end for the employer, big or small, or the remotest idea of the muddle at the receiving end in Whitehall with the multiplicity of Departments, the one taking the money in and four or five others paying it back.
The right hon. Gentleman said that it would not be very long before the repayment was made. But the plain and


rather unpleasant fact is that whether the repayment is in the first period of 17 weeks or the second of 13 weeks, and whatever Department is concerned, the employer, big or small, is giving the Government something that they cannot get anywhere else—an interest-free loan. While he is in process of giving the Government this involuntary interest-free loan, he is being pressed by the bank, because of the credit squeeze, to do something about his overdraft. He is caught between two draughts which are quite outside his control.
The artificial and arbitrary dividing line between manufacturing firms and distributive or service firms is absolute nonsense. So long as there is a premium for category 1, there will be every encouragement for those firms to hang on to labour which might otherwise be surplus. So long as there is discrimination against the service industries, although there may be a shake-out, costs are bound to rise. Almost all the service industries perform services for the public which directly or indirectly affect the actual cost of living and the cost of living index, and to this extent the success of the Prices and Incomes Bill will be made more difficult to achieve.
Never have I seen a Bill worse designed, worse drafted, more obscure in its scope or less likely to have the desired effect.

10.42 p.m.

Mr. Ian Percival: I endorse and adopt all the reasons, general and detailed, so cogently advanced by my right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hobson) for the total rejection of the Bill. It is a monster. It has got out of hand. It is bulging with absurdities. It is crammed full of unfairness. It is riddled with disincentives.
Nowhere will the effect of the tax be more widely or unfairly felt than in constituencies like mine. Nowhere will the infinite number of anomalies hit harder than in Southport and towns like it. Nowhere will the wholly unfair discrimination be more damaging than in Southport and towns like it.
Both the tax and the Bill providing for the machinery of repayment are thoroughly bad. I have no doubt how my constituents would vote on the Third

Reading if they had the chance, and I have no doubt how they will show their opinion of it when they have the opportunity to do so at a General Election.
Passing from the generalities to a small point of detail, on which I should like the assistance of Ministers, I recall that the Minister of Labour said this evening that it was not his intention to require employers to keep records in any particular form. I think that I have that right. I do not know whether either of the Ministers would care to say whether he agrees, but that is how I took the right hon. Gentleman's words down. He said that he was, therefore, giving up the power to require employers to keep records in a particular form and this was why Clause 7(4) was to be deleted.
If the right hon. Gentleman says that that was his intention in moving to delete Clause 7(4), I entirely accept it as genuine. He was kind enough to indicate that he had formed that intention as a result of arguments advanced by my hon. and right hon. Friends and myself on this question of records, and that he had heeded our arguments and accepted our criticisms, and that his object was to seek to meet them.
While I fully accept the genuineness of his intentions, it ought to be made clear that what he has done does not succeed in giving effect to them. What he has done is to substitute for Clause 7(4) a new wording of Clause 7(1,b) which says, in effect, that the Minister may decline to make repayments unless the employer produces such records of the payment of Selective Employment Tax in respect of persons engaged in employment, etc., as the Ministers concerned may reasonably require.
Although this may have been quite unintentional on the part of the Minister, and I make my observations on that assumption, the result is exactly what we had before. The position now is simply that instead of the Minister doing something positive and saying that one must keep such and such records, what happens is that he can decline to pay unless such records as he requires to be kept are kept. It is the same thing, done in a different way.
Accepting entirely what the Minister said in moving the Third Reading, that it was not his desire to have powers to


require employers to keep records in a particular form, the point I am making is that the Minister's Amendments, which he has had to prepare very quickly, have not secured the result that he intended and have not secured the result that he informed the House this evening on Third Reading he intended to secure.
Unless I am wrong in my interpretation, I hope that the Minister will take the opportunity, in another place, of implementing the intentions which he has expressed this evening, because he has not so far met the points made by my hon. and right hon. Friends and myself.

10.47 p.m.

Mr. Peter Blaker: During my short time in this House I have got used to a feeling of indignation when I hear speeches from the benches opposite, but it is true to say that I have seldom felt so indignant as I felt during the speech of the right hon. Gentleman the Minister of Labour, moving the Third Reading. That may seem surprising, because it was a very moderate and reasonable speech, on the face of it. What made me indignant was that it was 16 minutes, and I timed it, of solid, bureaucratic officialese. When I come to judge bureaucratic officialese I know what I am talking about, because for 10 years I was writing it. This was one of the finest examples that I have ever heard.
By these remarks I am not criticising the very assiduous and capable officials who wrote the speech. I am criticising the Government who have adopted the policies which make that sort of speech necessary. That speech was 16 minutes of exposition of the administrative problems created by the Bill. The speech should have been totally unnecessary. The Government had adopted a system which, by its selective nature, has made that sort of speech necessary and created these problems. The many explanatory pamphlets which will be put out by the various Ministries in the coming months in an effort to clear up the anomalies and all of this bureaucratic activity has been made necessary by these policies.
When one reads the Minister's speech in HANSARD tomorrow, if any of us feel

able to bring ourselves to read it, it will be seen to be the most extraordinary collection of administrative phrases. I took some of them down. He said, "My right hon. Friend the President of the Board of Trade will be announcing how certain problems will be dealt with. Forms will be sent out on certain dates. Records must be kept. Repayment will take place in certain cases after 17 weeks. It is hoped that the first repayments will take place after 13 weeks." Then we had the extraordinary passage about what are "office purposes". He said, "Among the non-qualifying activities are activities carried on for office purposes," and went on, "Some people seem to have interpreted this as meaning something rather wide."
"No," he said, "This is not true; the term 'offices' has a much narrower meaning than many people have realised." Those were his words. In my 43 years, I had formed the impression that I knew what an office was, but, apparently, I do not, nor does any other hon. Member on this side or the 50 million people in the country. When the Minister reached this passage, the lawyers were on the edges of their seats. My right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hobson) interjected what was, I am sure, a valid argument, and the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) thought that it was something different: all the lawyers wanted to raise points with the Minister.
That is what is happening in this House, with people who are not now considering, although they will later have to consider, no doubt, how they will pay the tax and get the repayment and adjust their businesses in such a way as not to bear a bigger burden than necessary. But what will happen when the Bill gets to the country, if this is what happens in the House, when 50 million people will be directly concerned with the question of how to avoid paying perhaps 25s. a week if they employ one person, or thousands of pounds a week?
If we cannot interpret the Bill after days of careful study, what will happen to Mr. Jones or Mr. Smith, whose businesses it directly affects—[AN HON. MEMBER: "Or Mr. Brown."]—when they are faced with this problem? This little encounter about the meaning of an office is a very


good example in miniature of the legal disputes, and, I am sorry to say, the fiddling and scrimshanking which will result all over the country from this inept and ill-thought-out Bill.
The right hon. Gentleman spoke about the companies and firms which will be fortunate enough to claim the repayment. What about the individuals? I have had a letter from an elderly gentleman in my constituency, aged 75, whose wife is over 70. Both are invalids and the wife is paralysed with arthritis. They employ a domestic servant-cum-nurse to help them. He is an intelligent man, and he is worried. I have had considerable correspondence with him. I wrote to tell him that, under a concession granted by the Government in response to pressure from this side, he would be entitled to a repayment.
This is all right as far as it goes, but this elderly gentleman, who is 75 and has a wife who is paralysed at the age of 70, will have to keep records and make sure that he makes the repayment claim. This will be happening all over the country.
The main criticism of the Bill and the Minister's speech is that it is all totally unnecessary. If it is necessary for the Government, as a result of their inept policies of the last two years, to raise £250 million of revenue, they could have done it with a flat-rate payroll tax of 4s. in the £ across the board, and all these debates and problems and the fiddling and scrimshanking which will occur would have been unnecessary.
Do right hon. Gentlemen opposite remember the words of the Labour Party manifesto, in 1964? They said:
We are ready, poised to swing our plans into instant operation.
Is this one of those plans? I acquit them of the charge. I do not think it could have been, because not even hon. and right hon. Gentlemen opposite could have prepared a plan of this ineptitude—if they had given it prior consideration. What a way to run a country !

10.55 p.m.

Sir G. Nabarro: The silence of the Government benches in the context of this Bill is just about as dramatic as shouting a four-letter word in church.

Hon. Members: Oh.

Mr. Thomas Swain: Is the hon. Member speaking from experience?

Sir G. Nabarro: There is an hon. Gentleman who has just come into the Chamber; he has not sat through the debates, and before he interrupts he might learn what the Bill is about.

Mr. Roy Roebuck: Will the hon. Member give way?

Sir G. Nabarro: No. I will not. Sit down. I will give way at the proper moment. The hon. Gentleman who has just sprung to his feet has just come into the Chamber.

Mr. Swain: I have been out for only five minutes.

Sir G. Nabarro: The point I am making is that we had two speeches from the Government side of the House, a Ministerial speech, and a carping, niggling contribution by the hon. Gentleman the Member for Sheffield, Atter-cliffe (Mr. John Hynd). There is no enthusiasm in the Labour Party for this Bill. None whatever. I hear nobody opposite dissenting from that.

Mr. Roebuck: Mr. Roebuck rose——

Sir G. Nabarro: When I have finished my sentence. "Young eagles" are not particularly constructive or helpful.

An hon. Member: Neither are budgies.

Mr. Roebuck: I would rather be a "young eagle" than an old Tory crow.

Several hon. Members: Several hon. Members rose——

Sir G. Nabarro: Sit down. We have till 12.7 a.m. under the guillotine arrangements to complete the discussion on Third Reading, and if hon. Gentlemen opposite wish to make a constructive contribution and support the Treasury Bench they will subtract from the amount of time available to hon. Members on this side of the House.
Apart from that made by the hon. Gentleman the Member for Attercliffe, not one contribution has been made from that side, and, therefore, the fact is patently clear; there is no enthusiasm whatever for this Measure among Members of the Labour Party.
The Bill extracts £315 million of additional taxation in the current year. In addition, it forces and foists upon an unsuspecting community an interest-free


loan at the rate of about £100 million a month. I believe the Bill not to be deflationary, but to be inflationary. I believe the provisions of the Bill to be thoroughly inequitable. I believe the Bill to be highly immoral, because of its provisions by which hardship will be incurred.
We have had four speeches from this side of the House drawing attention to the incongruities and anomalies in the Bill. My hon. Friend the Member for Croydon, North-East (Mr. Weatherill) related how he wrung a concession from the Treasury on behalf of the bespoke tailor manufacturing firms which were to be classified originally as non-manufacturers and then reclassified by the Treasury later as manufacturers. Well, all charity begins at home and in this House Members of Parliament have, for purposes of the Selective Employment Tax, to be classified as self-employed persons.
That means that they will not pay the tax. It is significant that the Treasury did not put Members of Parliament into the Bill as expected or excluded people. The reason they did not do so was the fact that they would have been held up to opprobium by the general public for excepting Members of Parliament from rules and provisions applicable to other people. But whereas Members of Parliament are classified for purposes of the Selective Employment Tax as self-employed people, Members of Parliament are not taxed for their Income Tax as self-employed people. Oh, no; they are taxed under Schedule E as employed people.

Mr. John Wells: Will my hon. Friend allow me to interrupt?

Sir G. Nabarro: In a moment.
Here is just one more anomaly, that the Treasury will not explain to the House, or to me, why a Member of Parliament is classified as a self-employed person for the Selective Employment Tax, but is classified as an employed person under Schedule E, or as an office of employment, for Income Tax purposes.

Mr. John Wells: My hon. Friend should surely remember that the ordinary Member of Parliament who is not a notional full-time director of a company or a notional full-time servant of a trade union has for many years paid the self-employed rate of stamp.

Sir G. Nabarro: That is a further anomaly. My hon. Friend might go away and look up the facts, and he will find that his Income Tax assessment is under Schedule E as a Member of Parliament, as a self-employed person. What my hon. Friend is doing is reinforcing my case by creating a third anomaly within this context.
The only answer that the Treasury will give on this matter is that the Selective Employment Tax is nothing to do with Income Tax and that it is perfectly reasonable to classify a Member of Parliament as self-employed for purposes of Selective Employment Tax, but as an employed person for purposes of Income Tax assessment. Further than that, the Treasury will not go.
Bias, bigotry and discrimination run through every provision of this Bill—[Interruption.] I recommend the hon. Member for Derbyshire, North-East (Mr. Swain) to go away and learn how to pay his local rates before he interrupts me.

Mr. Swain: If the hon. Gentleman, the ex-Member for Kidderminster, whom I have always termed the expert carpetbagger, sees fit to insult me in the Chamber, and is prepared to repeat that outside in the Lobby, I will knock his "'tache" and his nose straight through the back of his blasted head.

Sir G. Nabarro: Mr. Deputy Speaker, I am awaiting your Ruling on that point of order.

Mr. Deputy Speaker: I was not aware that I had been addressed on any point of order. I understood that the hon. Member for Worcestershire, South (Sir G. Nabarro) made a personal reference to the hon. Member for Derbyshire, North-East (Mr. Swain), to which the hon. Member replied. I think that it would now be convenient if the hon. Member would resume his speech.

Sir G. Nabarro: I am sorry, Mr. Deputy Speaker, but——

Mr. Swain: Mr. Swain rose——

Hon. Members: Sit down.

Sir G. Nabarro: I thought that the hon. Gentleman, half-way through his intervention, used Ihe words "On a point of order". If you did not hear them,


Mr. Deputy Speaker, I am willing to forget them myself.
I was saying that bias, the bigotry and discrimination run through every provision of the Bill. I give only one or two examples in support of what I have said as my reasons and the reasons, I believe, of the majority of my hon. Friends for voting unanimously against this Measure tonight. The worst was the example referred to earlier this evening—the bias in favour of nationalised corporations and against private enterprise. We read in Schedule 1:
Bodies to which section 3 applies … An Area Electricity Board".
I repeat to the Financial Secretary the questions which were put to him earlier. I do so in the hope that we will have some evidence tonight in support of his allegation that nationalised corporations are to be treated on exactly the same terms—notably, an area electricity board—as a private enterprise contractor.
The Midland Electricity Board, for example, carries out considerable contracting services. Considerable numbers of men are employed on those contracting services. That board will be relieved of S.E.T. on those men. But if the identical tasks, purposes and contracts are carried out by a private enterprise firm, S.E.T. will be charged. This is a shocking discrimination against the private enterprise firm and perhaps the Financial Secretary—who intervened earlier and said that there was no such discrimination; that both bodies, private contractors and nationalised industry contractors would have parity of treatment—will explain how he arrives at that extraordinary conclusion, despite the terms of the Bill.
I must comment on non-qualifying activities and the flatulent explanations given by the Minister of Labour. The right hon. Gentleman has disappeared from the Chamber and will not have an opportunity to explain in greater detailin view of the extraordinary difficulties whilch will add to the bewilderment of industry—how quite large numbers of men are to be classified under the Bill.
What is a cost and works accountant in a manufacturing establishment? Is S.E.T. to be paid for him? What is a time and motion study engineer, in the

context of this Measure, employed full-time in a manufacturing establishment? Is S.E.T. to be paid for him? I am not concerned with research establishments alone when I talk about draughtsmen. Every engineering firm of any size employs a staff of draughtsmen. Whether such firms are manufacturers or engaged in scientific and research activities, draughtsmen are almost ubiquitous in industry. They are employed by manufacturing and non-manufacturing firms alike. Is a draughtsman in a manufacturing establishment to be the subject of S.E.T.? Is a works manager to be the subject of S.E.T.?
I could go through 100 classifications of men and women employed throughout industry, in merchanting firms and in a wide range of commercial undertakings, excluding nationalised undertakings, where dubiety exists. Bewilderment has already occurred throughout industry about the position of these men and women in relation to S.E.T.
I suppose that if this tax is continued for any length of time case law will be built up. There will be innumerable appeals to the courts, for there is no tribunal and no powers under the Measure for the Minister to have cases of genuine dubiety referred to an arbitration tribunal. Neither is there any provision in the Bill for Statutory Instruments to set right the obvious difficulties which will arise from the looseness of the classifications.
My party has not yet declared its future intentions towards to the Bill. For myself, I shall urge it to issue, I hope well before the next General Election—[An HON. MEMBER: "It will not be long now."]—no, it will not be long now—an unequivocal statement that the Tory Party will repeal this Measure at the earliest possible moment. It will be of great electoral value if it does.

Mr, Maurice Orbach: And it will do nothing about it.

Sir G. Nabarro: At least the hon. Member for Stockport, South (Mr. Orbach) is doing nothing about it. He has no reason to sit in this place and cry, "Hosanna, here we have fiscal delivery".

Mr. David Winnick: You are a fool.

Mr. Gresham Cooke: On a point of order, Mr. Deputy Speaker. Hon. Members opposite are saying that you are a fool. If you did not hear them I did.

Mr. Deputy Speaker (Sir Eric Fletcher): Order. The hon. Member for Twickenham (Mr. Gresham Cooke) must not say that. I am sure that no such remark was addressed to me.

Mr. Gresham Cooke: Further to that point of order, Mr. Deputy Speaker. I heard two hon. Members opposite, one of them the hon. Member for Croydon, South (Mr. Winnick), say, "You are a fool".

Mr. Orbach: Further to that point of order, Mr. Deputy Speaker. There is only one hon. Member of the House to which the words "You are a fool" could be addressed, and that is the hon. Member for Worcestershire, South (Sir G. Nabarro).

Sir G. Nabarro: I was saying that I shall urge my party to issue an unequivocal statement before the next General Election that it is our intention at the earliest possible moment to repeal this pernicious Measure.

11.13 p.m.

Mr. Edward M. Taylor: The Minister of Labour said that most of the arguments for and against the Bill had been discussed and that he would not deal with them, but it is only fair to point out that, in Committee, the only time that we were permitted to discuss the effect of the tax on Scotland was during a brief period of debate on the charities. In these circumstances, I want to discuss the effect on Scotland, for the Bill discriminates blatantly against Scotland.
It does so, first, by its impact on tourism, one of our main growth industries. It will hit it extremely hard. Secondly, it also hits the Highlands extremely hard. About 80 per cent. of the working population in the Highlands is in the industries which are to get no refunds or premiums. To that extent, it is working against all the regional policies the last Government introduced. And it affects not only the Highlands, but the Borders and many other development areas.
Thirdly, the Bill affects transport, which is vital to the outlying areas of Scotland and elsewhere. Transport is a vital cost in such areas and when we add to the effect of the tax the effect of the increases in the petrol tax and the cost of vehicle licence duties, there is clear discrimination against Scotland. More important, the Bill discriminates against wages in Scotland and other development areas because, in general, they are lower than elsewhere. A tax of 25s. for men and 12s. 6d. for women will have a savage effect.
But the Bill will also affect even some of the major industries which are to get a refund or premium, such as shipbuilding, which, in the West of Scotland, directly or indirectly provides a living for 100,000 people. It may surprise the Government to know that the Scottish banks are now only £10 million below the limit of overdrafts. The Selective Employment Tax will cost about £2½ million a week. After four weeks, if the money comes from overdrafts, there will be no more finance to come from the banks. We have seen that in the North-East one of the shipbuilding yards is in very severe difficulties. What is to happen to other yards which are in a poor financial state when, for 17 weeks, they have to provide a loan of this sort to the Government?

Mr. Gresham Cooke: What about John Brown's, building the "Queens", and going into liquidation?

Mr. Taylor: We cannot impress too much the position, not only of John Brown's, but of every yard. This tax could well be the straw which breaks the camel's back. It is a very serious situation. Irrespective of the percentages which the Government may provide, there is no question that for outlying areas the Bill will be very serious. The Government have said that they can change the Bill by Order, that under Clause 9 they have certain powers to refine the Bill in special ways, but, having read that Clause carefully, I can see no way, except by a very very unusual exercise of powers, that the Government could bring in an Order to exempt the regions. They could exempt trades and parts of an industry, but I cannot see how relief could be given to an area.
One of our most vital industries in Scotland is building. The Government were brought to power on the basis of an election manifesto which promised that housing would be treated as a military operation. Now we see the shambles in which the construction figures have gone down, houses started in the second quarter, approved in the second quarter and completed in the second quarter were all down compared with the same quarter of last year, after a quite disastrous first quarter. It is clear that to put a further cost on to the industry and disincentive will be very serious. Hon. Members opposite who think that this is not important should come to Glasgow to see the housing position there and how vital it is that we should push ahead and build more houses. The Bill has made the position of the building industry much more serious.
For these and many other reasons advanced by my hon. Friends I trust that we shall reject the Bill and soon see an end of this tax.

11.18 p.m.

Mr. Gresham Cooke: Ministers are not able to travel about the country at present, because they are chained to their desks with a mass of ill-digested legislation, but if they were able to do so and to listen to what people are saying they would know that at the moment Parliament is in ill repute. I said it last night, but there is a bigger audience tonight—people are going about the country with stickers on their cars saying, "Guy Fawkes come back; all is forgiven".
The reason is that people think that Parliament has no influence on events and that we are being bull-dozed and have no influence on the Government over this Bill or financial measures which the Government are taking. The principle behind this Bill is entirely wrong. Anyone in trade or industry knows that the weakest part at present is in the sales and service side of an organisation. Anyone with a piece of machinery in his home knows that it is the sales and service side which wants assistance, not die manufacturing side.
There are all sorts of services which have not been discussed tonight under the Guillotine. I was particularly concerned with Clause 10 and new Clause 8, which were not discussed. Here I declare

an interest as a director of Rootes Motors. The motor industry has expanded in the last few years and thrown out new despatch departments in Coventry and research departments elsewhere, but these outlying parts will not qualify for premium whereas the old factories will. That sort of problem could have been discussed in this House if we had been given a chance to do so.
If Mr. Speaker were tomorrow to give a certificate to the Bill as a Money Bill the other place would not have a chance of putting forward Amendments and discussing these important points. I went to a firm in a congested area in North London the other day which has gradually expanded by buying up old properties so that it has its sales side in one property, manufacturing in another and distribution in another. It finds that although it is manufacturing it will pay far more on the sales and distribution than it receives on the manufacturing side because it is scattered in various premises a mile or so apart. That kind of anomaly has not been discussed and that is why the public are saying that Parliament is in disrepute and that we have no effect on events. The Executive is far too strong and is bulldozing the country. That is why the people will throw the Government out at the next General Election.

11.22 p.m.

Mr. Gordon Campbell: The Bill makes perfectly clear that the Selective Employment Tax is not a payroll tax. Although it has been called that as an abbreviation, it is a misnomer, because three-quarters of the money is to be paid out again; and to manufacturing industry it is not a tax at all. After a forced loan it is to be paid a bonus.
In reply to Questions which I put to Treasury Ministers, I was told that nearly 80 per cent. of the tax collected is to be paid out again in England and Scotland. But no convincing case has been put today to justify the complicated and expensive administration which this entails, or the many anomalies to which many of my hon. Friends have referred this evening. There is no case either for these forced loans, at a time of high interest rates and a credit squeeze, from those who will not ultimately pay the tax at all.
Nearly 80 per cent. is to be paid back, but that is not the percentage in certain regions. Here I come to the regional considerations to which my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) referred. From figures which the Treasury gave in May, it was clear that the Highlands, the only rural area for which it gave an estimate, would receive very much less in repayment because of the preponderance of service industries and the small proportion of manufacturing.
Perhaps the Treasury was rash to give those figures in May, soon after the tax was announced, but it stated at that time that for England as a whole the proportion of money to be returned in refunds and premiums will be 68 per cent. and for the seven crofting counties in the Highlands 18 per cent.
Since then I have put down further Questions, after the concessions for charities, the extractive industries and others on the way in which the refunds would be paid. The Treasury has refused to give any estimates of the same kind, but that earlier estimate was enough to show the enormous difference between a large rural area and England or Scotland as a whole. The percentages which have been given, nearly 80 per cent. now, indicate that the Highlands would probably now be about 26 per cent., at any rate less than 30 per cent., and therefore considerably different from the country as a whole.
Other rural areas for which no estimates have been given must be in a similar position; for example, the North-East and the South-West of Scotland and no doubt comparable large rural areas in England and Wales. I emphasise that the geography of Scotland is such that this question is more serious for those areas in Scotland than perhaps anywhere else. When young people are leaving school in such areas, will they get the jobs they were expecting in hotels, garages, shops or offices? The managers cannot be blamed if they reduce staff and the vacancies disappear.
That is evidently one of the Chancellor's objects, but as there is little manufacturing industry in such areas—and the employment provided by manufacturing industry in the Highlands is only

10 per cent., according to the Government's own figures issued in January—will not these young people have to leave these areas? In the case of Scotland they will undoubtedly go south to England, or else go abroad, and this will accelerate the flow away from Scotland which in other contexts the Government have been contending that they are trying to stop. No wonder the letters S.E.P. have come to mean in Scotland the Scottish Emigration Plan !
I recognise that in the industrial belt in Scotland the problem will not be the same. My hon. Friends have brought to light many of the anomalies which arise there, but it is the large rural areas that make up so much of Scotland which will suffer, and those whose jobs will disappear, or for whom there will be no jobs, may well have to leave Scotland altogether.
The Guillotine has resulted in our having no chance in Committee to discuss the main points affecting such areas in Scotland, the areas which will bear the heaviest impact of the tax because so little is to be repaid to them under the Bill. In a tantalising way, Ministers have spoken of refining the tax after it has been in operation for some time, and there has been a hint that in such refinement in the future regional considerations could be taken into account. But why not do this now? The regions which will be hit the hardest under the Bill are largely those which the Government are supposed to be aiming to assist with development. Instead of reducing jobs, the Government are supposed to be increasing employment in those areas.
Nothing was said during the General Election campaign in March that most of the jobs in the north of Scotland, for example, would be subjected to this tax, while a large proportion of jobs elsewhere would not only not be taxed, but would be rewarded with payment of a premium. This is a classic example of the Government's habit of saying one thing and doing another.

11.28 p.m.

Lieut.-Colonel Sir Walter Bromley-Davenport: I shall develop the point so ably put by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). The only reason why the nationalised industries are to be


exempted from the Selective Employment Tax is that that is the only way by which they can be helped to compete against private enterprise.
There are three golden rules which are never broken by these moronic nationalised industries.[Laughter.] Let the animal noises cease both above and below the Gangway opposite. They increase costs, they give worse service, or they inflict gigantic losses on the public—and usually it is all three together.
I say again, at dictation speed to get it right into the cranium of the Minister, that the real object of the tax is to help the nationalised industries to defeat private enterprise and to try, if possible, to put it out of business. If that is not the reason, what is it?

11.30 p.m.

Mr. Patrick Jenkin: I am glad that the Parliamentary Secretary to the Ministry of Technology is in his place, because the point I am about to raise is relevant to his activites. The tax we are considering is seen as wholly ludicrous in the context of the developing technological industries. The whole trend in these industries is away from having men actually at the plant making things and towards reducing the number of people directly engaged in manufacture.
Correspondingly, the trend must be weighted towards the employment of those who are coming to be known as technico-administrative people. The number of firms having to employ a greater proportion of people in offices is increasing in the technical industries, in computer manufacturing, in the chemical industries and in other advanced manufacturing. It is a very strong trend.
If a firm has more than 23 per cent. of people who do not qualify as manufacturing, it will be worse off under the Bill. In the chemical industry, more than 23 per cent. of the staff are administrative and technico-administrative, and, therefore, if that industry were considered as a lump, it would not qualify for refund or premium.
The tax must, therefore, have an influence diametrically in the wrong direction. It must encourage firms to continue to employ people on machines when they ought to be putting in automation.

It will inhibit the employment of planning staff and those engaged on similar exercises in offices, but without these people firms cannot expect to invest, develop and expand. For this reason, if for no other, the Bill is thoroughly bad and I shall vote against it.

11.32 p.m.

Mr. Iain MacLeod: Normally, when we come to the Third Reading of a Bill, we feel that it is the completion of a task. We may either like or detest the Measure in question, but at least something has been achieved. Something has been attempted, something done, and, I dare say, we have earned a night's repose. But in this case all that the House of Commons has done is a journey round the mulberry bush.
The whole of the Bill has now been made out of date, particularly by the Prime Minister's statement on 20th July. The Bill was conceived in folly. It was thought right to take a certain sum of money, about £240 million in a full year, out of the pockets of the people, and an orthodox package to achieve this was prepared. Then right hon. Gentlemen opposite turned up their eyes in horror at the thought of doing something which might look similar to 1961, and so, out of the pigeon-holes, came the elemental folly of the Selective Employment Payments Bill.
The Bill goes back to a primitive folly of the Labour Party, the idea that there is something good sacred and magical about manufacturing and something utterly wrong about services. This absurdity is really the parent of all the anomalies to which so many of my hon. and right hon. Friends have drawn attention. That was how the Bill was conceived and when the day came that it should be delivered the Government looked around and found that the maternity wards were full. The Bill ought to have been run by the Treasury, it ought to have been dealt with, in all of its details, by the fiscal Departments. It is an intolerable constitutional affront that it should have been run by the Minister of Labour.
I do not know where the Minister of Labour is. If he is ill I would accept that at once, but we have been told all the time that this is a Ministry of Labour Bill. The Minister's name is the first on the


Bill, all the Amendments are tabled in his name and it is his accounting officer who is to be responsible.

Hon Members: Where is he?

Mr. MacLeod: It is the final insult to the House that the right hon. Gentleman cannot come here tonight for the final stages of the Bill. Even at this late stage, if the guillotine Motion allowed it, and I realise that it does not, I would move the Adjournment of the House, against the affront being offered to the House by the Government. The Minister——

Hon. Members: Send for him.

Mr. MacLeod: It is not the business of the Ministry of Labour to deal with these matters. The Minister of Labour is very well liked in this House, on both sides. He is very highly respected and the answers given by the Parliamentary Secretary were received with great sympathy and understanding on this side of the House, although we did not agree with them. But the Parliamentary Secretary should never have been asked to give those answers. It is intolerable that a Parliamentary Secretary to the Ministry of Labour should be put up at that Box to plead the case against special treatment for the disabled.
It has been said before, and I say it again, for the last time, that this Bill is deeply offensive to everything that the Ministry of Labour has ever stood for, and I hope, will stand for in future. We know the origin of this miserable child. We remember that happy little episode at the beginning of Budget day, with the Chancellor on television afterwards, and the vision offered to us of a ladies' hairdressing assistant tripping off to a blast furnace in Sheffield and all the rest, which would somehow put the economy right.
That is how all of this nonsense started. From the very beginning this concept was attacked. I have said outside the House, and I would like to say it here, that one of the most brilliant pieces of improvised opposition—because it had to be improvised; we had only a few seconds' notice—was the immediate response of my right hon. Friend the Leader of the Opposition, in the 10-minute reply that he made to the

Budget speech. Right from the beginning, without notice, he pinpointed the mistakes that, one by one, over the months the Treasury Ministers have been forced to admit.
Within a short time my right hon. and hon. Friends were saying that the method of repayment for agriculture was nonsense. I remember my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) saying that. Yet this had gone through the Cabinet, when the Minister of Agriculture and the Secretary of State for Scotland and the Secretary of State for Wales were silent.

Hon. Members: Where are they?

Mr. MacLeod: Every single concession, without exception, the concession to agriculture, charities, china clay and many others, was pressed by the Opposition, resisted by the Treasury Bench and finally conceded by it in response to the overwhelming case that we have been able to make.
Now we come to the last stages, and only the Treasury team are left to us. We are faced by a Treasury team that has been utterly discredited over these last few months. They have been wrong, both from and before the Budget and both on and before——[HON. MEMBERS:"Hear, hear."] I am very glad to see that the right hon. Gentleman the Minister of Labour has entered the Chamber. He will be able to read in HANSARD what I have said. I was just expressing sympathy with him, that he has had to handle such a Bill, sharing his shame that a Minister of Labour should be associated with such a Measure and saying that I appreciated the efforts, even in a bad cause, by his Parliamentary Secretary.
I would draw the attention of the House to what has been achieved under this wretched Guillotine. On Clause 1, in Committee, there were selected by the Chair 61 Amendments, including the main debates, the Clauses and the Amendments selected with them. Of those, 12 were discussed or 20 per cent. On Clause 2, 89 were selected and 11 discussed: that is, only 9 per cent., and I am leaving aside the 14 Government Amendments, 12 at least of real importance, which went through on the nod without a word of explanation from the Government.
Not a word was heard on Clause 4, about local authorities, in Committee or on Report. The same with Clause 6, relating to the special households. The same with Clause 8, relating to enforcement. Not a word either in Committee or on Report. On Report, not a syllable has been spoken about the Bill, because it was impossible, in view of the five hours allocated to us, even to complete the discussion on new Clauses.
During those five hours we discussed five new Clauses and five other Amendments. That is 10. Half an hour each—and, counting the time for Divisions, no one can conceivably say that all that time should not have been given. That meant that we did not even complete the discussion of the new Clauses, and all the questions which my right hon. and hon. Friends tried to raise in this all too brief Third Reading debate went entirely unconsidered.
We do not regard this as the end. We will ensure that every single Labour Member who voted for the allocation of time Motion is brought to account in his own constituency for that vote. We will make sure that they know about their votes against special treatment for the disabled, for the elderly, and for the part-time workers.
I would give a special message to the Co-operative Members. We knew well how brave they would be and we turned out to be right. Many of them voted for the allocation of time Motion, knowing very well that it would close out—and they wanted to close out—discussions of the retail and part-time workers and all the other aspects which we were told they held so dear. We knew they would run away; they did run away, and they will answer for it, each one of them, in their constituencies.
They will, of course, get this shabby Bill. Look at them ![HON. MEMBERS: "Where are they?"] Those who are here. By the use of the Guillotine and the use of the Closure, by the abuse of Parliamentary procedures in the same way as we have seen on the Prices and Incomes Bill, somehow they hope that they will reach the Recess. That is what they want.
I say this in the presence of my right hon. Friend the Member for Kinross and

West Perthshire (Sir A. Douglas-Home)—in my day, I have done almost as much shooting as he has—no grouse moor owner has longed for 12th August as much as this Government do. They have been mute of malice almost throughout. Almost at all times those benches have been empty while ours have been crowded. On the Third Reading, one speaker from the back benches opposite, and one speaker only, and he critical of the Bill, spoke in the time which was available.
I hope that the Financial Secretary has not got a brief prepared as the Chancellor of the Exchequer did at the end of the Third Reading debate on the Finance Bill, when he explained at great length what things we would be voting against if we voted against the Third Reading of that Bill. This is an ordinary Parliamentary procedure: it does not mean that one is against every comma of the Bill. The Government of today know perfectly well that, as the Opposition, on three occasions they voted against the Third Readings of Finance Bills.
So, then, we have got this Bill, as a monument to the follies which have been revealed from the very first speech by my right hon. Friend the Leader of the Opposition to those on Third Reading, and the devastating speech of my right hon. and learned Friend the Member for Warwick and Leamington (Sir J. Hob-son). What we are left with is the melancholy satisfaction of being right, and that is little comfort, because it is the people who will suffer from the follies of Treasury Ministers. Any success which they achieve will be because of the deflation and because of the unemployment which they have now been driven into planning for the people.
The Budget judgment was wrong, and it is admitted to be wrong. The Budget speech founded on it was wrong, and is admitted to be wrong. The Budget legislation, the Finance Bill and this Bill which comprise the Selective Employment Tax, those, too, were wrong, and are increasingly being admitted to be wrong. Therefore, it is with very great pleasure that we shall record our vote tonight against the Third Reading of this Bill. We shall carry our fight forward against the Bill from this House to the country till we win.

11.46 p.m.

Mr. MacDermot: I think that hon. Members who have experience of debates under the Guillotine know they can fall into one of two classes. Either the Opposition choose—because the choice lies with them—to use the timetable for a series of short, sharp and very relevant and debates pertinent to the contents of the Bill, or they may choose instead to use the time by having general, wide-ranging debates and then complain that the debate has been strangled as the result of Government measures.
The choice lies with the Opposition and, of course, it is perfectly clear where, on this Bill, their choice has lain. I must say, sitting here, as I have done, hour after hour, I have often wondered whether I was not suffering from the neurological disease called deja vu where one feels that one has been through it all before, because we have had to listen to the same arguments being brought up again and again.
The criticism that there has not been ample opportunity to debate the Selective Employment Tax is really too silly for words.[HON. MEMBERS: "Oh."] Let me remind hon. Members. We began with the Budget debates themselves, where a very large part of hon. Members' speeches were devoted to the Selective Employment Tax. We then had the Finance Bill, and I think I can say that the whole Second Reading debate was devoted to the tax—virtually the whole of it. We then had the Committee stage of the Finance Bill and on that we spent 33 hours and 10 minutes discussing what was then Clause 42. We had the Report stage, when hon. Members spent another 2 hours 30 minutes—altogether a total of 35½ hours of debate on the tax during the debates on the Finance Bill.
We then had the Second Reading of this Bill, and we then had the Committee stage under the Guillotine with three days with 1½ extra hours each day—24 hours. The right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) reminded the House again of three particular issues on this tax which, of course, have been a constant and repeated refrain throughout the debates—the particular position of part timers, the disabled and the elderly. I would remind the House that in Committee and on Report of the Finance Bill, we had six hours

of debate devoted exclusively to part timers, whose various circumstances were also a constant refrain of other speeches on other Amendments. When we come to the 24 hours of time-tabled debate on the Bill, we see that 3½ hours of those were spent discussing Amendments on part timers. We discussed the disabled for 1½ hours on the Finance Bill and four hours on this Bill, and the elderly 1½ hours on the Finance Bill and three hours on this Bill.
Well, it is entirely a matter for the Opposition to choose how they want to use their time, but once they have chosen to use it that way it hardly lies in their mouth to complain that there are other matters which have not been debated, many of which I have been asked to reply to—they having been raised for the first time in this debate. The truth is that the Opposition do not want to discuss the Bill. They do not want to improve the Bill. They want to strangle it[HON. MEMBERS: "Hear, hear."] "Hear, hear," they say: I thought they would say that. If that is the position, they must not complain that we have strangled debate if they do not want to debate the Bill.
The right hon. and learned Member for Warwick and Leamington (Sir J. Hobson), in the unusually knockabout speech which he made this evening, appeared to be unaware even of the changes which had been effected in the Bill. He alleged that the only alterations which we had made to the Bill—that is to say, to the categories which qualify for the premium or the refund—were in respect of film laboratories and newspapers. Of course, the lie was immediately given to that by one of his hon. Friends, who thanked us for one of the other Amendments which we had made and which affected bespoke tailoring.
There have been many other categories—gas, opencast mining, electricity, water supply, and transport establishments serving refund-earning establishments, and a number of other anomalies which were thrown up from the Standard Industrial Classifications, such as bakehouses attached to shops, all of which were covered by Government Amendments to the Bill. Indeed, so little interest did the Opposition Front Bench


appear to have that they put down again on Report an Amendment to achieve something which had already been achieved by one of the Government Amendments that we passed in Committee, dealing with bakehouses.
I was asked by the right hon. Gentleman to deal with and to comment upon the question of establishments, to say why we had chosen establishments rather than total businesses or trading organisations as being the unit on which we based the repayment or the refund. There are a number of reasons for it. One is the severely practical one, which is that virtually all establishments are already classified in the Ministry of Labour records for other purposes. This, of course, saves an enormous amount of administrative work—something which hon. Members opposite have sneered about all through the debates until today, when they decided to spend 2¾ hours of the time available to have a debate on how we must cut down the Civil Service and not allow it to expand at the rate at which it is expanding—something which could not have been achieved if we had accepted half the Amendments which hon. Members opposite have asked us to accept.
The fact is that the establishments test is the right approach. It is the right unit to use for what is a selective system of tax and rebates according to the nature of the activity which is being carried on. Very many business organisations have establishments in different classifications, in different categories. Apart from the administrative difficulties of trying to determine the position of businesses, many of which will have establishments spread all over the country, they will not themselves in the end produce units which will fit into the system of industrial classification. The approach which has been so much criticised is the approach which hon. Members opposite adopted when they were in government and had to decide a system of classification of industry for purposes of the levy under the Industrial Training Act. They adopted the same test of establishments.
The right hon. Gentleman cited the case of an important electronic company. He did not give its name, but, if he wishes, I would be delighted to go into the particulars of it. Where we have had particular cases of large companies

of the sort that he described, we have found that, in practice, the company which has complained has been suffering from a number of misunderstandings about the effect of the Bill, and, as was made clear in an earlier debate, the effect of the Bill is much more beneficial to them than they have usually imagined.
While taking the establishment as being the unit, we have introduced a considerable measure of flexibility. From the start there was in the Bill power for my right hon. Friend and the other Ministers concerned to make an Order dividing an establishment so as to separate the manufacturing part from the rest in certain circumstances. My right hon. Friend made clear on Second Reading what the criteria would be. Broadly speaking, there must be two sets of activities of a different kind, generally under different minimum list headings, and they must be physically distinguishable and separately organised.
Under the Amendments which have been accepted, there now is a new power to unite different establishments on the application only of the employer in order to treat as one what otherwise are two establishments. This is to obviate the sort of difficulties where a factory was expanding to, say, the other side of a road.
My hon. Friend the Member for Sheffield, Atterclifle (Mr. John Hynd) asked what would be the criteria upon which this power to unite establishments would be used. Broadly speaking, it is the intention to use this power where two establishments are contributing to a single activity under the same minimum list heading and where the two establishments are in close proximity. It has not been thought right to try to lay down—as one Opposition Amendment did—a definite distance. One Amendment suggested one mile. We do not want to put anything so rigid into the provision and, as I say, the intention is that they should be close to each other in geographical proximity.
I was questioned about the definition of "office purposes", on which my right hon. Friend commented in his opening speech and it was said that it was not for the Minister, but for the courts, to decide the meaning of this term. That is true, but in this, as in many other Measures,


it is the practice, where there is doubt as to the possible meaning of a word, for the Government to inform the House of the best legal advice available to them about the true construction. Until the matter has been tested, or upset, in the courts, naturally that is the construction which the Minister who will administer the Measure will apply.
In this case, since the definition and interpretation which he gave will clearly, and in every case, be in favour of the employer, it is exceedingly unlikely that any employer will appeal in the courts against that construction. Thus, one may take it that, in practice, the interpretation which my right hon. Friend gave is the one which will operate and which will continue to operate.
The hon. and learned Member for Southport (Mr. Percival) commented on what my right hon. Friend said about the keeping of records under Clause 7. My right hon. Friend was not dealing with the Amendment to which the hon. and learned Gentleman was referring. He was not saying that he was giving up the power to require records to be kept. He said that he did not intend to require them to be kept in a particular form. The matter which was argued in Committee by a number of hon. Members—the request to my right hon. Friend to alter the terms of his legal power in this respect—was followed up and carried out precisely in the Government Amendment.
The hon. Member for Windsor (Sir C. Mott-Radclyffe) raised a number of questions about the application of the Bill, in particular for farmers. As my right hon. Friend said, we are not going to make difficulties for people about the forms of the records to be kept. They will merely be told the information on which it is required that records should be kept. The hon. Gentleman instanced the case of a farmer with a varying number of employees from week to week or month to month. This will not present difficulties. The payments will be in repect of the tax which has been paid via the Class I National Insurance contributions. It makes no difference whether the numbers employed are constant or vary. The hon. Member asked how the matter will be checked. The employers will have to keep records of

the tax paid and these will be open to inspection.
The hon. Member for Worcestershire, South (Sir G. Nabarro) and others raised the allegation—made a number of times—of unfair competition between the nationalised industries and those parts of the private sector in competition with them. As my right hon. Friend the Chief Secretary made clear in Committee, it is our intention that this tax shall operate fairly and that there shall not be unfair advantage for those parts of the public sector competing with the private sector. But nor must they suffer an unfair disadvantage. The Government accept this general principle. This is reflected, for example, in the decision on the direct labour used by local authorities in new construction work.
Where Government establishments are engaged in manufacturing, they have been instructed to calculate their prices is if they received the premium. The Royal Ordnance factories are an example of this. On the other hand, where a service is provided and a charge is made, the tax is to be taken into account as a relevant staff cost. Government Departments will, of course, pay the tax and the cost will be shown in the next Estimates.

Sir G. Nabarro: I am grateful to the hon. and learned Gentleman for giving way. He has twice said that he proposes—I use my own words—to ensure parity, to ensure truly competitive terms between a nationalised undertaking and the equivalent private enterprise undertaking. How does he propose to do this? I press him on it because the Bill contains no method by which it can be done. How is it proposed to give effect to the promise he has given?

Mr. MacDermot: I was coming to that point. I was wondering whether to give way now to the hon. Gentleman for that reason.
Clearly, there is a great variety of different cases in relation to the nationalised industries and some of them have been referred to in our debates. I invite hon. Members, on behalf of my right hon. Friend, to submit to us any cases where they consider that unfair competition is operating as a result of the tax. On the basis of the matters raised, we propose to enter into discussions with the


nationalised industries and consider with them in what way we can operate the tax and their pricing system fairly so as not to have unfair competition of the kind referred to.

Mr. F. V. Corfield: The fact remains that, under the Bill, the electrical contracting industry, for example, will pay 25s. per head for every man employed in competition with nationalised industries which will pay nothing. The hon. and learned Gentleman is wrong in saying that the Chief Secretary deployed a clear answer. He never did throughout the whole proceedings on the Bill.

Mr. MacDermot.: I have read carefully what my right hon. Friend said and I heartily disagree with the hon. Member. In any event I hope that the answer J have given is clear.

Sir J. Hobson: Sir J. Hobson rose——

Mr. MacDermot: I am sorry, but I have already given way twice on this specific point. I have only three minutes left.
Again tonight we have heard from the right hon. Member for Enfield, West (Mr. Iain Macleod) what is becoming the old chestnut that the tax has in some way become out of date as a result of the recently announced measures. This is complete nonsense. All the objectives of the tax stated by my hon. Friend the Chancellor of the Exchequer at the outset are still as relevant and even more relevant than they were then. I remind the House of what they are.
The first and primary objective is to raise revenue and that continues to play an important part in the disinflationary measures the Government have adopted. The second objective is to broaden the tax base, a principle which was welcomed very widely at the time not only in this House, but throughout the country. For all the criticisms which hon. Members have made of this tax, it is this above all which will ensure that it is of a lasting nature.
Thirdly, it is to make a start towards redressing the balance between the services

and the manufacturing sector in tax liability, to encourage greater economy of labour and higher productivity in the service industries. This again was sneered at throughout the debates. But we had this evening most telling evidence in an excellent speech by the right hon. Member for Enfield, West of the way in which industries in headquarters and organisation of business are as a result of the tax reviewing their whole manpower situation and scrutinising it in the most careful way, which is precisely the effect we predicted.

Mr. Iain Macleod: Will the hon. and learned Gentleman answer, in the time available, one simple point? The Bill is the legislation of the Budget judgment of the Chancellor. Last week the Chancellor said that his Budget was wrong.

Mr. MacDermot: Mr. MacDermot rose——

Mr. Macleod: How, therefore, in these circumstances, can he defend the Bill to which he now asks the House to give a Third Reading? Will he answer that question in the time available?

Mr. MacDermot: I am amazed that the right hon. Member, with two minutes——

Hon. Members: Answer.

Mr. Macleod: Mr. Macleod rose——

Hon. Members: Order.

Mr MacDermot: With two minutes——[HON. MEMBERS: "Answer".] Listen to the answer. Stop baying and listen to the argument. I had two minutes in which to answer the precise question of the right hon. Member——

It being seven minutes after Twelve o'clock (consideration of the Bill having been entered upon at seven minutes after Four o'clock), Mr. Deputy Speaker proceeded, pursuant to Order[18th July], to put forthwith the Question necessary to bring the proceedings on Third Reading to a conclusion.

Question put:—

The House divided: Ayes 287, Noes 216.

Division No. 160.]
AYES
[12.07 a.m.


Abse, Leo
Alldritt, Walter
Archer, Peter


Albu, Austen
Allen, Scholefield
Armstrong, Ernest


Allaun, Frank (Salford, E.)
Anderson, Donald
Ashley, Jack




Atkins, Ronald (Preston, N.)
Ford, Ben
Mallalieu, J. P. W. (Huddersfield, E.)


Atkinson, Norman (Tottenham)
Forrester, John
Mapp, Charles


Bacon, Fit. Hn. Alice
Fowler, Gerry
Marquand, David


Bagier, Gordon A. T.
Fraser, John (Norwood)
Marsh, Rt. Hn. Richard


Barnes, Michael
Fraser, Rt. Hn. Tom (Hamilton)
Mason, Roy


Barnett, Joel
Freeson, Reginald
Mayhew, Christopher


Beaney, Alan
Galpern, Sir Myer
Mellish, Robert


Bellenger, Rt. Hn. F. J.
Gardner, A. J.
Mendelson, J. J.


Bence, Cyril
Garrett, W. E.
Millan, Bruce


Benn, Rt. Hn. Anthony Wedgwood
Garrow, Alex
Miller, Dr. M. S.


Bennett, James (G'gow, Bridgeton)
Ginsburg, David
Mitchell, R. C. (S'th'pton, rest)


Bidwell, Sydney
Gordon Walker, Rt. Hn. P. C.
Molloy, William


Binns, John
Gourlay, Harry
Morgan, Elystan (Cardiganshire)


Bishop, E. S.
Gray, Dr. Hugh (Yarmouth)
Morris, Charles R. (Openshaw)


Blackburn, F.
Greenwood, Rt. Hn. Anthony
Moyle, Roland


Blenkinsop, Arthur
Gregory, Arnold
Mulley, Rt. Hn. Frederick


Boardman, H.
Griffiths, David (Rother Valley)
Murray, Albert


Booth, Albert
Griffiths, Rt. Hn. James (Llanelly)
Neal, Harold


Boston, Terence
Gunter, Rt. Hn. R. J.
Newens, Stan


Bottomley, Rt. Hn. Arthur
Hamilton, James (Bothwell)
Norwood, Christopher


Bowden, Rt. Hn. Herbert
Hamilton, William (Fife, W.)
Oakes, Gordon


Boyden, James
Hamling, William
Ogden, Eric


Braddock, Mrs. E. M.
Hannan, William
O'Malley, Brian


Bradley, Tom
Harper, Joseph
Oram, Albert E.


Bray, Dr. Jeremy
Harrison, Walter (Wakefield)
Orbach, Maurice


Brooks, Edwin
Haseldine, Norman
Orme, Stanley


Broughton, Dr. A. D. D.
Hattersley, Roy
Oswald, Thomas


Brown, Rt. Hn. George (Belper)
Hazell, Bert
Owen, Will (Morpeth)


Brown, Hugh D. (G'gow, Provan)
Healey, Rt. Hn. Denis
Page, Derek (King's Lynn)


Brown, Bob (N'c'tle-upon-Tyne, W)
Henig, Stanley
Paget, R, T.


Brown, R. W. (Shoreditch &amp; F'bury)
Herbison, Rt. Hn. Margaret
Park, Trevor


Buchan, Norman
Hooley, Frank
Parker, John (Dagenham)


Butler, Mrs. Joyce (Wood Green)
Horner, John
Parkyn, Brian (Bedford)


Callaghan, Rt. Hn. James
Houghton, Rt. Hn. Douglas
Pearson, Arthur (Pontypridd)


Cant, R. B.
Howarth, Harry (Wellingborough)
Peart, Rt. Hn. Fred


Carmichael, Neil
Howarth, Robert (Bolton, E.)
Pentland, Norman


Castle, Rt. Hn. Barbara
Howie, W.
Perry, Ernest G. (Battersea, S.)


Coe, Denis
Hughes, Emrys (Ayrshire, S.)
Perry, George H. (Nottingham, S.)


Coleman, Donald
Hughes, Hector (Aberdeen, N.)
Prentice, Rt. Hn. R. E.


Concannon, J. D.
Hughes, Roy (Newport)
Price, Christopher (Perry Barr)


Conlan, Bernard
Hunter, Adam
Price, Thomas (Westhoughton)


Corbet, Mrs. Freda
Hynd, John
Price, William (Rugby)


Cousins, Rt. Hn. Frank
Jackson, Peter M. (High Peak)
Probert, Arthur


Craddock, George (Bradford, S.)
Janner, Sir Barnett
Pursey, Cmdr. Harry


Crawshaw, Richard
Jay, Rt. Hn. Douglas
Rankin, John


Cronin, John
Jeger, George (Goole)
Redhead, Edward


Crosland, Rt. Hn. Anthony
Jeger, Mrs. Lena (H'b'n&amp;St. P'cras, S.)
Rees, Merlyn


Cullen, Mrs. Alice
Jenkins, Hugh (Putney)
Rhodes, Geoffrey


Darling, Rt. Hn. George
Jenkins, Rt. Hn. Roy (Stechford)
Richard, Ivor


Davidson, Arthur (Accrington)
Johnson, Carol (Lewisham, S.)
Roberts, Albert (Normanton)


Davies, Dr. Emest (Stretford)
Johnson, James (K'ston-on-Hull, W.)
Roberts, Goronwy (Caernarvon)


Davies, G. Elfed (Rhondda, E.)
Jones, Dan (Burnley)
Roberts, Gwilym (Bedfordshire, S.)


Davies, Ednyfed Hudson (Conway)
Jones, Rt. Hn. SirElwyn (W. Ham, S.)
Robinson, Rt. Hn. Kenneth (St. P'c'as)


Davies, Harold (Leek)
Jones, J. Idwal (Wrexham)
Rodgers, William (Stockton)


Davies, Ifor (Gower)
Judd, Frank
Roebuck, Roy


Davies, Robert (Cambridge)
Kelley, Richard
Rose, Paul


de Freitas, Sir Geoffrey
Kenyon, Clifford
Ross, Rt. Hn. William


Delargy, Hugh
Kerr, Russell (Feltham)
Rowland, Christopher (Meriden)


Dell, Edmund
Leadbitter, Ted
Rowlands, E. (Cardiff, N.)


Dewar, Donald
Ledger, Ron
Ryan, John


Diamond, Rt. Hn. John
Lee, Rt. Hn. Jennie (Cannock)
Sheldon, Robert


Dickens, James
Lee, John (Reading)
Shore, Peter (Stepney)


Dobson, Ray
Lestor, Miss Joan
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Doig, Peter
Lever, L. M. (Ardwick)
Short, Mrs. Renée (W'hampton, N. E.)


Donnelly, Desmond
Lewis, Ron (Carlisle)
Silkin, John (Deptford)


Driberg, Tom
Lomas, Kenneth
Silkin, S. C. (Dulwich)


Dunn, James A.
Loughlin, Charles
Silverman, Julius (Aston)


Dunnett, Jack
Luard, Evan
Skeffington, Arthur


Dunwoody, Mrs. Gwyneth (Exeter)
Lyon, Alexander W. (York)
Slater, Joseph


Eadie, Alex
Lyons, Edward (Bradford, E.)
Small, William


Edwards, William (Merioneth)
Mabon, Dr. J. Dickson
Snow, Julian


Ellis, John
McBride, Neil
Stewart, Rt. Hn. Michael


English, Michael
MacColl, James
Stonehouse, John


Ennals, David
MacDermot, Niall
Summerskill, Hn. Dr. Shirley


Ensor, David
Macdonald, A. H.
Swain, Thomas


Evans, Albert (Islington, S. W.)
McGuire, Michael
Swingler, Stephen


Evans, loan L. (Birm'h'm, Yardley)
McKay, Mrs. Margaret
Taverne, Dick


Faulds, Andrew
Mackenzie, Gregor (Rutherglen)
Thomas, lorwerth (Rhondda, W.)


Fernyhough, E.
Mackie, John
Thornton, Ernest


Finch, Harold
Mackintosh, John P.
Tinn, James


Fitch, Alan (Wigan)
Maclennan, Robert
Tomney, Frank


Fletcher, Raymond (Ilkeston)
McMillan, Tom (Glasgow, C.)
Tuck, Raphael


Floud, Bernard
McNamara, J. Kevin
Urwin, T. W.


Foley, Maurice
MacPherson, Malcolm
Varley, Eric G.


Foot, Michael (Ebbw Vale)
Mahon. Peter (Preston, S.)
Wainwright, Edwin (Dearne Valley)







Walker, Harold (Doncaster)
Willey, Rt. Hn. Frederick
Wilson, William (Coventry, S.)


Wallace, George
Williams, Alan (Swansea, W.)
Winnick, David


Watkins, David (Consett)
Williams, Alan Lee (Hornchurch)
Winterbottom, R. E.


Weitzman, David
Williams, Clifford (Abertillery)
Woof, Robert


Wellbeloved, James
Williams, Mrs. Shirley (Hitchin)
Wyatt, Woodrow


Whitaker, Ben
Williams, W. T. (Warrington)
Yates, Victor


White, Mrs. Eirene
Willis, George (Edinburgh, E.)



Whitlock, William
Wilson, Rt. Hn. Harold (Huyton)
TELLERS FOR THE AYES:


Wigg, Bt. Hn. George

Mr. Lawson and Mr. Grey.




NOES


Alison, Michael (Barkston Ash)
Gower, Raymond
Morrison, Charles (Devizes)


Allason, James (Hemel Hempstead)
Grant, Anthony
Mott-Radclyffe, Sir Charles


Astor, John
Gresham Cooke, R.
Munro-Lucas-Tooth, Sir Hugh


Awdry, Daniel
Griffiths, Eldon (Bury St. Edmunds)
Murton, Oscar


Baker, W. H. K.
Grimond, Rt. Hn. J.
Nabarro, Sir Gerald


Balniel, Lord
Gurden, Harold
Neave, Airey


Batsford, Brian
Hall, John (Wycombe)
Noble, Rt. Hn. Michael


Beamish, Col. Sir Tufton
Hall-Davis, A. G. F.
Nott, John


Bennett, Sir Frederic (Torquay)
Hamilton, Michael (Salisbury)
Onslow, Cranley


Berry, Hn. Anthony
Harris, Reader (Heston)
Orr, Capt. L. P. S.


Bessell, Peter
Harrison, Brian (Maldon)
Orr-Ewing, Sir Ian


Biffen, John
Harrison, Col. Sir Harwood (Eye)
Osborn, John (Hallam)


Birch, Rt. Hn. Nigel
Harvey, Sir Arthur Vere
Page, John (Harrow, W.)


Black, Sir Cyril
Harvie Anderson, Miss
Pearson, Sir Frank (Clitheroe)


Blaker, Peter
Hastings, Stephen
Peel, John


Body, Richard
Hawkins, Paul
Percival, Ian


Bossom, Sir Clive
Hay, John
Pike, Miss Mervyn


Boyd-Carpenter, Rt. Hn. John
Heald, Rt. Hn. Sir Lionel
Pink, R. Bonner


Boyle, Rt. Hn. Sir Edward
Heath, Rt. Hn. Edward
Pounder, Rafton


Braine, Bernard
Heseltine, Michael
Powell, Rt. Hn. J. Enoch


Brewis, John
Higgins, Terence L.
Price, David (Eastleigh)


Brinton, Sir Tatton
Hiley, Joseph
Prior, J. M. L.


Bromley-Davenport, Lt. Col. Sir Walter
Hill, J. E. B.
Quennell, Miss J. M.


Brown, Sir Edward (Bath)
Hobson, Rt. Hn. Sir John
Ramsden, Rt. Hn. James


Bruce-Gardyne, J.
Hogg, Rt. Hn. Quintin
Rawlinson, Rt. Hon. Sir Peter


Bryan, Paul
Holland, Philip
Rees-Davies, W. R.


Buchanan-Smith, Alick (Angus, N&amp;M)
Hordern, Peter
Renton, Rt. Hn. Sir David


Buck, Antony (Colchester)
Hornby, Richard
Ridley, Hn. Nicholas


Bullus, Sir Eric
Howell, David (Guildford)
Ridsdale, Julian


Campbell, Gordon
Hunt, John
Rippon, Rt. Hn. Geoffrey


Carlisle, Mark
Hutchison, Michael Clark
Rodgers, Sir John (Sevenoaks)


Carr, Rt. Hn. Robert
Irvine, Bryant Godman (Rye)
Rossi, Hugh (Hornsey)


Cary, Sir Robert
Jenkin, Patrick (Woodford)
Royle, Anthony


Chichester-Clark, R.
Jones, Arthur (Northants, S.)
Russell, Sir Ronald


Clark, Henry
Jopling, Michael
St. John-stevas, Norman


Clegg, Walter
Joseph, Rt. Hn. Sir Keith
Sandys, Rt. Hn. D.


Cooper-Key, Sir Neill
Kaberry, Sir Donald
Scott, Nicholas


Cordle, John
Kerby, Capt. Henry
Sharples, Richard


Corfield, F. V.
Kershaw, Anthony
Shaw, Michael (Sc'b'gh &amp; Whitby)


Costain, A. P.
Kimball, Marcus
Sinclair, Sir George


Craddock, Sir Beresford (Speltho'rne)
King, Evelyn (Dorset, S.)
Stainton, Keith


Crouch, David
Kirk, Peter
Stodart, Anthony


Cunningham, Sir Knox
Knight, Mrs. Jill
Stoddart-Scott, Col. Sir M. (Ripon)


Currie, G. B. H.
Lambton, Viscount
Summers, Sir Spencer


Dance, James
Lancaster, Col. C. G.
Talbot, John E.


Davidson, James (Aberdecnshire, W.)
Langford-Holt, Sir John
Tapsell, Peter


d'Avigdor-Goldsmid, Sir Henry
Legge-Bourke, Sir Harry
Taylor, Sir Charles (Eastbourne)


Dean, Paul (Somerset, N.)
Lewis, Kenneth (Rutland)
Taylor, Edward M. (G'gow, Cathcart)


Deedes, Rt. Hn. w. F. (Ashford)
Lloyd, Ian (P'tsm'th, Langstone)
Taylor, Frank (Moss Side)


Dodds-Parker, Douglas
Lloyd, Rt. Hn. Selwyn (Wirral)
Teeling, Sir William


Doughty, Charles
Longden, Gilbert
Temple, John M.


Douglas-Home, Rt. Hn. Sir Alec
Loveys, W. H.
Thatcher, Mrs. Margaret


Drayson, G. B.
Lubbock, Eric
Thorpe, Jeremy


du Cann, Rt. Hn. Edward
MacArthur, Ian
Tilney, John


Eden, Sir John
Macleod, Rt. Hn. lain
Turton, Rt. Hn. R. H.


Elliot, Capt. Walter (Carshalton)
McMaster, Stanley
van Straubenzee, W. R.


Eyre, Reginald
Macmillan, Maurice (Farnham)
Vaughan-Morgan, Rt. Hn. Sir John


Farr, John
Maddan, Martin
Vickers, Dame Joan


Fisher, Nigel
Maginnis, John E.
Wainwright, Richard (Colne Valley)


Fletcher-Cooke, Charles
Marten, Neil
Walker, Peter (Worcester)


Fortescue, Tim
Maude, Angus
Wall, Patrick


Foster, Sir John
Maudlins, Rt. Hn. Reginald
Ward, Dame Irene


Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Mawby, Ray
Weatherill, Bernard


Galbraith, Hn. T. G.
Maxwell-Hyslop, R. J.
Webster, David


Gibson-Watt, David
Maydon, Lt.-Cmdr. S. L. C,
Wells, John (Maidstone)


Giles, Rear-Adm. Morgan
Mills, Peter (Torrington)
Whitelaw, William


Gilmour, Sir John (Fife, E.)
Miscampbell, Norman
Wills, Sir Gerald (Bridgwater)


Glover, Sir Douglas
Mitchell, David (Basingstoke)
Wilson, Geoffrey (Truro)


Godber, Rt. Hn. J. B.
Monro, Hector
Wolrige-Gordon, Patrick


Goodhart, Philip
More, Jasper
Wood, Rt. Hn. Richard


Goodhew, Victor
Morgan, W. G. (Denbigh)
Woodnutt, Mark









Worsley, Marcus




Wylie, N. R.




Younger, Hn. George




TELLERS FOR THE NOES:




Mr. Pym and Mr. R. W. Elliott.

Bill accordingly read the Third time and passed.

Orders of the Day — ELDERLY PEOPLE (HEALTH AND WELFARE)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bishop.]

12.18 a.m.

Mr. David Winnick: It is often said, with a great deal of justification, that how far a society is civilised depends very much on how it treats its very young and its very old. In the last few years, there has been a good deal of progress in the way we treat our very young, but there has not been the same degree of progress in the way we treat our very old.
We are glad to recognise that there has been some progress, and I am very pleased that the Social Security Bill is to become law by the end of the year. On the Second Reading of that Bill, I said that I regarded it as a step in the right direction. I think I am right in saying that this weekend the Ministry of Pensions and National Insurance loses its old title and becomes the Ministry of Social Security. I take this opportunity of wishing the new Ministry, with its new name, the very best of luck.
One of the greatest needs of the elderly is, quite simply, more money. Most of us have seen elderly retired people doing their shopping looking for the cheapest buy, knowing full well that the money in their pockets will not last the rest of the week. I have no wish to exaggerate, but there is a tremendous amount of real hard poverty surviving in our country today, and particularly among people living on small fixed incomes.
This is why the new Social Security Bill, which will guarantee a fixed income for elderly people, is a step in the right direction. The Government are to be congratulated upon bringing this legislation forward so promptly. I also hope

that over a period of time it will be possible to increase yet again the basic old-age pension. The last increase, a very substantial one, took place at the beginning of 1965 and I hope that it will not be long before we can consider increasing it again.
At the end of 1964 the pension increase was delayed and elderly people on National Assistance received a grant of £4. I want to suggest that, even in our present economic condition, these people in great need and now receiving National Assistance, should be given every year at Christmas time, a sum of money—£4 or £5—as a sort of Christmas box. I hope that this idea will be taken seriously. If week in and week out, our elderly people, have a tremendous struggle to make ends meet then surely at one period of the year we can consider giving them an extra amount of money?
Many of the things which we take for granted, getting our laundry, having shoe repairs carried out, going to the hairdresser, are things which elderly people living on small fixed incomes have the utmost difficulty in providing for because the limited amount of money in their possession does not stretch to such things. That is why, without wishing to exaggerate the position, I say that there is a lot of hard poverty among those people in our community who have retired with no private income and only the State pension to fall back on. Under the Bill which will be in operation by the end of the year, an extra amount will be paid to provide a guaranteed income.
I am also keenly interested in reduced fares for old people, having raised this matter on previous occasions. An Act was passed at the end of 1964, by my Government, which made it possible for local authorities which run their own transport undertakings to reduce their fares for the elderly. By and large this has been successful. Unfortunately, this Act does not apply in the London area. I hope that it will be possible in future for the Act to be extended, so that those people who are retired and not living in an area where the transport undertakings are run by local authorities will be able to get reduced fares. There is no great difficulty about this; it can be done, and many retired people would be very pleased to visit relatives and friends in


off-peak hours. My right hon. Friend the Minister of Transport is looking at this and I hope that she will be able to report progress very soon.
There are many other problems concerning the elderly and retired people. I am very keen on non-residential clubs, where retired people can go during the day and have a hot meal at a reduced price and enjoy the companionship of their fellow citizens. In my own constituency we have a Darby and Joan Club, and another club, run directly by the branch of the Old Age Pensioners' Federation, in the New Addington part of my constituency. About eight miles from the town centre of Croydon, we have a club known as the Pop Inn, where elderly people can go during the day. In the London Borough of Brent, two clubs have been provided, built by members, where elderly folk can go every day, including Sundays. There are many facilities and amenities, and cheap meals are provided. Encouragement to local authorities to provide these clubs would be an important step in arranging the companionship which many elderly people need.
Poverty is a great problem for them, but so is loneliness, not knowing what to do, and not having enough money to travel. I hope that my hon. Friend will consider encouraging such clubs as I have mentioned and encouraging local authorities to build new ones and provide for the upkeep of existing ones. I know that it is said that ratepayers would be alarmed if too much money were spent on welfare matters, but I do not believe they will be angry if local authorities spend some money on the elderly.
I believe that the vast majority of working people would be willing for such facilities to be provided. Some local authorities are reluctant to provide money for these clubs, but these are isolated cases. I think that the Ministry would be impressed by the two clubs run by the London Borough of Brent. I should perhaps declare an interest, because I am a member, although an inactive one, of Brent Council.
There are still many elderly people living on their own and isolated from the rest of the community and more effort should be made to locate them. We read of people found dead after seven or ten days, during which time no one knew

anything about them. This happens when people are hopelessly cut off and isolated. Some effort must be made to locate these people and see that they are not so neglected as to die on their own, unknown to their neighbours. Advertisements could be put in local papers encouraging people who know of such elderly citizens to go to their local town hall or Ministry of Social Security office.
A greater effort must be made with the Meals on Wheels service for people who cannot get out of their homes. I would pay a tribute to those responsible, mainly the W.V.S., for that service. They provide a first-class service, but it needs to be expanded. Perhaps my hon. Friend would comment on that.
I am also impressed by the numbers of senior schoolchildren who do welfare work instead of playing sport. Fifth and sixth formers of 15, 16 and 17 visit elderly and retired people in their homes. In this they do find a job of work, but also, I believe, it gives the young people some sort of insight into the lives of the elderly people. One of the things I have always been troubled about is that once people retire, once they are forced to live on the State pension, there is a tendency in our society rather to look upon them as though they belong to another planet—as though they are different from the rest of us. The more we make sure that the elderly and retired people are treated and looked upon just like everyone else, the heathier will be our general attitude. We must not look upon elderly people as different from us. The one and only difference, if there is a difference, is that they have retired and are no longer in a position to earn their livings.
There are many other problems concerning elderly and retired people that I should like to speak about, but I have not the time now, and, obviously, I want to allow time to my hon. Friend to reply to this short debate, but I want to make just one or two final points. Some months ago a debate was initiated by my hon. Friend the Member for Rochester and Chatham (Mrs. Anne Kerr). She initiated a very useful debate about the needs of and facilities for elderly people. I believe—I may be wrong—that, apart from the Third Reading of the Social Security Bill, this is the first opportunity we have had of discussing


this subject since the debate initiated by my hon. Friend. I think it is important that we continue to discuss this subject. It is very important for as long as there is this problem in our community of retired people who live in poverty that their problems should be spotlighted in the House. Therefore, as long as there is this particular problem outstanding in our community, as long as there are retired people who so greatly need money and opportunity, it is our duty, certainly on this side of the Chamber, to raise this subject. We cannot be satisfied or complacent till we have removed the curse of poverty from our fellow citizens who have retired.

12.32 a.m.

The Parliamentary Secretary to the Ministry of Health (Mr. Charles Loughlin): I want if I can to meet most of the points my hon. Friend has made in his very cogent speech this evening, but it would be right for me at the very beginning to indicate to him that one or two of the points he has advanced are not the responsibility of my Department and it would be difficult for me to give answers to them.
My right hon. Friends the Minister of Health and Minister of Pensions and National Insurance occupy a central position in the study of the problems affecting aged people. I would caution my hon. Friend, because there are no simple answers. I think that to some extent he himself realises this, and he wisely limited himself to a few points. Of course, he gave me notice of some of the points he was going to raise this evening. So I was forewarned, but the points which he has brought up raise big subjects. If I do not now cover all the matters which ensue from what he has said, I will give him the assurance that I will write to him about any points I miss.
I think there are two big issues involved here. One is how, and along what lines, the practical services should develop; and secondly, how we are to identify, as my hon. Friend so rightly says, the people who need them. I do not think this is an occasion for an array of statistics, but I think I can illustrate both issues with some approximate figures. In 1965, in England and

Wales, there were about 5·8 million men and women aged 65 and over, and by 1976 this figure will be about 7 million. This shows the order of size of our development problems. The figure of 7 million, I know, if it truly reflected the situation, would be a rather frightening one. I think we must realise that old age does not begin at 65, and perhaps in trying to solve these problems we have to look for a closer measure of need. It is reasonable to say that whilst many of the young elderly will need practicable forms of help, it is upon the older groups that our attention ought first of all mainly to be fixed.
There are many indications that demands for services start to grow sharply at around the age of 75. In 1965 there were approximately 2 million people at or over that age. That number is expected to increase by about 25 per cent. to some 2·4 million in the next few years. It is this figure that seems likely to suggest the real order of size of the problems to be faced.
The question remains: what services shall we require, and for whom shall we require them? We must first of all have in mind that a service of some kind or a contact of some sort is available to great numbers already. A high proportion of them live at home among their families and friends, although the population census shows that around 1 million men and women of pensionable age are living alone in single-person households, and I think that this is a problem that requires close attention. However, all of them are or should be in touch with their family doctors.
Large numbers are benefiting from some local authority service. For instance, housing authorities have provided about 400,000 dwellings suitable for elderly people, and there is evident growing interest in special housing schemes with residential wardens, which are planned to increase by about 2½ times in the next five years. Some three-quarters of the work of home nurses and home helps and a growing part of the work of health visitors is concerned with the elderly. A small army of volunteers, among whom, I am glad to say, are a growing number of young people, some still at school, link up with local authority welfare services to provide


friendly visiting and practical help. But it is certain that all these services do not reach all who need them, and it is highly probable that many of those who are reached do not have all the services that could help them.
Two questions arise. Have the local authorities, who must be the focus of welfare, all the powers they need to provide for welfare comprehensively, and can they find those who do not come forward so that they can be given the services? I believe there is scope for much wider use of the power to provide recreation, which all authorities have, as a basis for finding old people and giving them, for example, friendly visiting services. A number of authorities are already getting down to finding the facts, some with the aid of private Act powers.
One prominent county borough in the North West takes pride in being in regular touch with all its older people. One of our largest authorities is now engaged on contacting and discovering the primary demands made by people in its area aged 75 and over. A number of other authorities are doing similar work. Some local authorities have taken advantage of the assistance and arrangements made by my right hon. Friend the Minister of Pensions and National Insurance for circulating local information in connection with welfare services with initial pension order books in order to draw people to the services.
I have little doubt that my hon. Friend is right in pin-pointing the prevention of loneliness and isolation—not simply from neighbours but from contemporaries—and the development of meals services as important elements of such a policy, which call for fact-finding and action. I recognise, as most of us who are concerned with these problems do, that not enough is being done, but certainly a great deal is being done. Voluntary services already provide, often with local authority help, about 7,000 social clubs. There are already 1,500 old people's welfare committees serving as a nucleus of voluntary visiting services, linked with the authorities. Local authorities now run more than 100 day centres and plan to quadruple them in about ten years.
Interest is growing in preventive health clinics, bringing all the health and welfare services together. If there is caution in many areas before jumping too quickly

into the fray, it is often justifiable. Old people need individual, not mass, solutions, and services tailored to their needs, and, of course, the resources of the area. Most certainly authorities should stimulate the growth of recreational and visiting services, but they need to examine with care what they expect to, and can, achieve.
From the point of view of resources, I want to encourage authorities to experiment with forms of clubs and centres. However, I am sure that careful thought and experience of the functions of such centres is needed before large expenditures are embarked upon.
My hon. Friend referred to the Meals on Wheels service. There has been rapid growth and there is need for considered expansion. It has been the W.R.V.S. which has borne the brunt of this development and, incidentally, has attracted some very unfair criticism in the process. Since 1962, when the W.R.V.S. delivered nearly 3½ million meals, its Meals on Wheels deliveries have nearly doubled, to 6·3 million. Meals provided in clubs last year totalled over 1 million. These figures do not include services provided by the British Red Cross Society, old people's welfare committees and local authorities. Probably upwards of 70,000 elderly people are now receiving meals on at least one, and usually two or three, days a week at a modest charge. I am not suggesting that they should receive only one or two such meals a week. We should aim to extend this service as far as we can, including weekend cover. Estimates vary about the need for expansion, but considered expansion is very desirable.
There will always be the problem of identifying those who can most benefit. But the organisation of the expansion of a dispersed service of adequate meals to a changing clientele will present difficulties to authorities in arranging supply and delivery without undue expense. My Department is about to undertake a preliminary survey to examine the different methods of service and to identify the problems involved. A more scientific approach to nutritional needs is necessary, and the Department's Chief Medical Officer's Committee on the Medical Aspects of Food Policy has set up a panel to examine the existing evidence. These together will give us full knowledge


about the contribution that the meals service can aim to make to the wellbeing of elderly people in difficult circumstances. The service of the future is likely to be very different from the past, through sheer changes of scale, and there will be many difficulties in the process of growth.
My hon. Friend has stressed the importance of the rôle of the new Ministry of Social Security and of the Supplementary Benefits Commission in welfare. The whole House has shown its appreciation of the step forward which the new Act marks. Many in doing so would share with us appreciation of the rôle the National Assistance Board has already played and will continue to play until the Commission is set up. I do not think that it is widely enough recognised that the Board is itself concerned with the welfare of those whom it serves. Its officers have regularly visited all elderly people receiving assistance—nearly 1½ million in 1965—and most of them have been visited at least twice a year. In these visits, the Board's officers have looked out for welfare needs, advised on how to get help or actually called in the appropriate agency.
The new Commission, like the Board, will have no specific welfare function of

its own but will have a duty to look out for welfare needs which statutory or voluntary services are able to meet. The Commission's officers will not need to visit elderly people as often as do those of the Board in order to deal with the need for small extra allowances and the staff time freed can be used for such purposes as finding those who have not claimed or have not claimed enough. It will naturally be the Commission's task to look for welfare problems in these cases also.
A start is to be made with pensioners on first retirement and with the widows of pensioners. My right hon. Friend has stressed the need for positive action to assist in identifying people who are in need of welfare services. What I want the House to recognise is that we appreciate the difficulty with which we are faced but we are attempting to deal with the major problem of identification and the second problem of organising the services.

The Question having been proposed after Ten o'clock on Thursday evening and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at thirteen minutes to One o'clock.